Fiat, Severstal agree venture to make diesel engines Russia


Fiat SpA, Italy's largest manufacturer, agreed to form a joint venture with OAO Severstal- Avto to make diesel engines in Russia, as carmakers seekpartnerships to cut costs and raise profit margins.

The two companies expect to complete the accord by the end of March, Turin, Italy-based Fiat said in an e-mailed statement today. Fiat CEO Sergio Marchionne is forging alliances to expand sales in developing countries by jointly developing models with carmakers including Ford Motor Co. And Tata Motors Ltd., India's third-biggest. Fiat already has an agreement with Severstal-Avto to build Fiat's Ducato vans in Russia. „Marchionne has done a good job financially in cleaning up the company,” said Karim Bertoni, who helps manage €13.6 billion ($18 billion) in assets at Banque Syz & Co. in Geneva. „He's making alliances in emerging markets like Russia and India, which is a good strategy to guarantee future growth.” Fiat and Severstal-Avto will produce F1A diesel engines developed by Fiat Powertrain Technologies at the Russian company's plant near Nizhniy Novgorod in the Volga region, Fiat said. The engine will power Fiat Ducato vans and Severstal- Avto's UAZ Patriot sport utility vehicle, Fiat said. (Bloomberg)


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