Fiat and India's Tata Motors announced earlier today that they have signed a 'Memorandum of Understanding' to investigate wide-ranging co-operation possibilities in the passenger automobile sector. The two companies will now set up a working group to explore fresh possibilities - both short and long term - in the areas of research and development, manufacturing, parts purchasing, material sourcing and components.

"A joint team will be formed by the two companies to determine the feasibility and specificity of the nature of cooperation, both in the short and long-term. If found feasible, the two companies will enter into definitive agreements in the course of the coming months," Tata Motors stated earlier. Tata Motors - part of the giant Tata industrial conglomerate - are India's biggest carmaker with a range of products that spans from popular compact cars right through to heavy truck and bus manufacturing operations.

"The agreement we have reached with the Tata Group represents another step forward in our strategy of searching aimed agreements in the automobile sector, realised in successful alliances with important partners, such as PSA, Peugeot, Citroen and Suzuki and in the memorandum of Understanding, recently signed with Ford," said Fiat Auto CEO Sergio Marchionne today.
 

"I would like to thank the Tata team, especially president Ratan Tata, for the excellent work they have accomplished with us," Marchionne added.

Meanwhile, the Tata Group and Tata Motors Chairman, Ratan Tata, said, "We are very happy to be able to discuss the possibilities of cooperation with Fiat. Fiat is a large group, respected in the world with a long presence in the history of automobiles. Both companies will benefit from this alliance in terms of opportunities to develop products together, share platforms and modules."

Fiat - who just weeks ago signed a new alliance with Ford - already have sales and manufacturing operations in India, which have struggled to compete in recent years. Tata meanwhile have distribution networks that export cars and trucks to Europe, Africa, the Middle East, South East Asia and Australia.