Fiat's bus and truck unit Iveco has signed an agreement with China's Shanghai Automotive Industry (SAIC) to set up a joint venture which would take a 67% stake in Chongqing Hongyan Automotive, SAIC reportedly said on Friday.

"The three companies have signed a preliminary deal to produce heavy commercial vehicles," SAIC spokesperson Zhu Xiangjun told Reuters.

The cooperation would also produce diesel engines using Iveco technology, SAIC said in a statement.

The companies reportedly did not reveal any financial details of the agreement, which they hoped would receive government approval in the first half of next year.

Citing the statement, Reuters said Chongqing Hongyan is a unit of Chongqing Heavy Vehicle Group, which would control the remaining 33%.

The news agency noted that Fiat last month said it was looking for wide-ranging co-operation with SAIC for everything except Fiat passenger cars, for which the Italian company cooperates with [new MG Rover assets owner] Nanjing Automobile in China.

Fiat has also been striking various co-operation deals with other carmakers to cut development and production costs, Reuters added.

It is in the process of launching its new small Sedici SUV developed in partnership with Suzuki and built in the latter's plant in Hungary.