General Motors plans to distribute the Brazil-built Fiat Palio and Siena models in Mexico. The partners also are discussing possible logistical synergies in their respective Brazilian operations, sources say.
An agreement to sell the Palio and Siena through GM dealers in Mexico could be announced as early as this week. The supermini twins, based on Fiat's 178 world car platform, are aimed at emerging markets.
Fiat Group Chairman Giuseppe Morchio flew to New York last week to conclude the deal with GM CEO Rick Wagoner. Before heading to the meeting, Morchio said he was looking for opportunities to broaden the industrial cooperation with GM.
The two companies signed a strategic alliance in March 2000. GM and Fiat Auto created two joint-venture companies: one for global purchasing for their operations in Europe and Latin America; another that merged all powertrain operations in the same regions.
The companies also have worked together on common vehicle platforms.
Fiat Auto remained deeply in the red in the first quarter, despite cost-cutting measures that it says are on track to generate about $1.15 billion in annual cost savings.
Fiat Auto reported a first-quarter operating loss of $385 million, lower than the $495 million deficit a year-ago but higher than the $207 million lost in the fourth quarter last year.
Revenue decreased 17.7 percent to $5.7 billion compared with last year as unit volume fell 19.1 percent, from 518,000 to 419,000 units.
Fiat says the 99,000-unit volume decline is about one-third attributable to a drop in unit sales. The rest reflects a production shortfall of about 31,000 cars caused by a flood at the Termoli, Italy, engine plant in late February and actions to cut vehicle inventory.
Fiat says Western Europe inventory has been reduced by more than 45,000 since the end of last year.
At the end of March, vehicle stocks fell to 292,000 units, equal to 1.4 months of sales. Fiat says inventories stood at 437,000 units, or a 2.1-month supply of sales at the close of the first quarter of 2002; and 340,000 units, or a 1.7-month supply, at the end of 2002.