THURSDAY, JANUARY 27, 2005
Fiat inks deal with Iran
AP
MILAN: Fiat Auto signed an agreement to make and distribute cars in Iran on Wednesday under a deal that will not require the loss-mired Italian carmaker to invest more than its expertise.
Under the cooperation deal, Iran's Pars Industrial Development Foundation will invest 200 million euros ($260.3 million) in the plant which should eventually pump out more than 250,000 units a year, Fiat Auto said in a statement.
Fiat Auto will not invest any cash but would provide "technical and technological support", a spokesman said. He declined to comment on how profits would be shared out.
The plant is due to start production in the second half of 2005 and will produce seven Fiat models. About 100,000 cars should roll off the assembly line per year in the first phase.
Fiat Auto CEO Herbert Demel said the deal in Iran the biggest auto manufacturer in the Middle East -- "forms part of our strategy for strengthening Fiat Auto's presence in markets with a high growth potential in the automobile sector".
Fiat Auto is already present in Brazil, Turkey, China, India and Poland and is trying to move more production and purchasing to cheaper countries in an attempt to return to profit in 2006.
PIDF Chairman Manouchehr Gharavi said Iran would join Fiat's suppliers network as part of the cooperation deal.
Iran's state-owned auto industry already makes cars for Peugeot , Nissan and GM-Daewoo. Renault is also about to start assembling cars in Iran.
PIDF will make Fiat's "world car" Palio hatchback, the Siena sedan, a pick-up, an MPV, a station wagon and two bi-fuel cars using compressed natural gas.
Fiat Group CEO Sergio Marchionne has long said he would like to forge new auto deals around the world to control costs while expanding but argues that a partnership with General Motors, which owns 10 percent of Fiat Auto, is holding it back.
The two groups are due to close a mediation process next week over whether Fiat can sell the rest of Fiat Auto to GM.
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