Fiat said today its Fiat Powertrain Technologies (FPT) division has signed a memorandum of understanding with Severstal-Avto to set up a joint venture to make its F1A engine.
The engine will be used in a Fiat van, called the Ducato LCV, and the Severstal-Avto sports utility vehicle (SUV), UAZ Patriot, it said.
The F1A will be made at Severstal-Avto's plant near Nizhniy Novgorod in the Volga region, it added.
"(The companies) agreed to finalize all pending issues with the overall goal to sign joint venture contracts in the first quarter of 2007," it said in a statement.
"This ... is another big step forward in our clearly defined strategy: expand our presence in the markets with the highest growth potential (and) through alliances with strategic partners," FPT head Alfredo Altavilla said in the statement.
Severstal-Avto already makes Albea sedans and Doblo minivans for Fiat.