Fiat Group Automobiles SpA announced yesterday it has signed a letter of intent to create a joint venture with Russia's Severstal Auto to build and sell Fiat brand cars and commercial vehicles in Russia.

Production of Fiat vehicles under the 50-50 joint venture is to begin in the first quarter of 2008, Fiat said in a statement.

"All of the vehicles produced in Russia will meet the quality standards of the Fiat Group," Fiat said, adding that it will decide the product range.

While details of the Severstal deal were still being worked out, it is part of Fiat Group CEO Sergio Marchionne's strategy of seeking industrial alliances and joint ventures to share costs and enter key markets.

"Severstal Auto's knowledge of the Russian market will reinforce Fiat's investment and efforts in the region," said Marchionne, left.

Thestar.com