Fiat Powertrain Technologies (FPT) and Severstal-Auto have signed a memorandum of understanding that should see the establishment of a joint venture in Russia to produce FPT’s F1A diesel engine.

The engines will be made at Severstal-Auto’s motor plant near Nizhniy Novgorod in the Volga region and will be installed in the locally-assembled Fiat Ducato LCV and Severstal-Auto’s new UAZ Patriot SUV.

The two firms hope to sign joint venture contracts in the first quarter of 2007.