Fiat Group and Russian carmaker Sollers JSC (formerly Severstal Auto) have signed a new joint venture deal worth 194 million euros that will see the Fiat Linea being built in Russia as well as a new engine manufacturing programme.

Fiat Group and Russian carmaker Sollers JSC (formerly Severstal Auto) have this weekend signed a new $305 million (194 million euro) joint venture deal that will see the new C-segment Fiat Linea '3-box' saloon being built in Russia, as well as initiating a new engine manufacturing programme with Fiat Powertrain Technologies. The deal was signed yesterday and announced by Fiat Group CEO Sergio Marchionne, and Vadim Shvetsov, the CEO of Sollers JSC, on the occasion of the St. Petersburg International Economic Forum.

Fiat and Sollers JSC already have a number of joint venture project running together, and the Russian carmaker builds the Palio passenger car and Ducato light van. This new 50-50 split agreement calls for the starting up of production of the new Fiat Linea saloon at the factory at Tatarstan in the Volga region, prior to an all-new plant being built.

The target is to produce 50,000 Lineas per year from the end of this year, with the new plant coming on stream during 2009. Eventually Linea production could rise to 150,000 units per year once full capacity has been achieved. The Linea is currently built at the Bursa plant in Turkey, while later this year its production will commence in Brazil and India. It is also earmaked to be built in China.

At the same time a new 50-50 joint venture between Sollers JSC and Fiat Powertrain Technologies will see 90,000 engines a year being built in Russia. These will be destined for the locally-built Ducato as well as a UAZ off roader. "The investment in the full cycle of production," said a statement, "will be around $120 million." The diesel engine deal will be worth around $185 million.

"Our partnership with Sollers starts a key chapter within the framework of a strategic alliance that is already benefiting from the strengths of the two partners in one of the world's fastest growing automotive markets," said Marchionne. Sollers JSC, which was recently renamed from Severstal Auto, holds controlling stakes in three major Russian car factories and as well assembling Fiat vehicles it also has agreements with UAZ, SsangYong and Isuzu.