Fiat Group Automobiles and Severstal Auto have announced during the 62nd IAA at Frankfurt this week the signing of a Letter of Intent to establish a commercial and industrial joint-venture in Russia. Each of the parties will have a 50% interest in the joint venture.

The agreement foresees the establishment of a business that will include sales and marketing of all Fiat branded vehicles (passenger and light commercial vehicles) in the Russian Federation, together with manufacturing facility, wherein the new Fiat Linea will begin production in the first quarter 2008.

All vehicles produced in Russia will conform to Fiat Group quality standards. Fiat Group Automobiles will also lead the definition of the product range. The Russian production site will form part of FGA’s global manufacturing footprint and the JV will be a part of Fiat Group Automobiles marketing and product strategy. While the details of joint-venture are being finalised, the signing of the L.O.I. for Russian operations reflects a growing commitment of the two organizations to work together and leverage their respective strengths.
 

Sergio Marchionne, Chief Executive Officer of Fiat Group, said: "This agreement gives both Fiat and Severstal Auto the opportunity to strengthen their presence in the Russian market while allowing the joint venture to benefit from Fiat’s marketing strategies and production standards. Severstal Auto’s knowledge of the Russian market will integrate and reinforce Fiat’s investment and commitment to this region."

Vadim Shvetsov, Chief Executive Officer of Severstal Auto, commented: "It’s a significant step in strategic cooperation between Fiat and Severstal Auto, which shows our strong commitment to exploit the potential of the growing Russian market and to develop both production and distribution of Fiat vehicles in Russia."