Fiat to collaborate with Ford on Small Cars

Small cars are becoming fashionable. With fuel prices rising and consumers preferring fuel-efficient cars to the gas guzzling trucks, smaller cars are becoming more and more important for the auto manufacturers. Fiat is one of the most successful compact car manufacturer in the world and they are now collaborating with the American auto giant Ford for developing smaller cars for the market.

Both the companies have finalizing a preliminary deal to co-develop new models due in 2007 and 2008. They plan to save money on development costs and benefit from economies of scale in the production of the vehicles together. This would also help both the parties in the procurement of parts of the automobiles. Fiat would also like this agreement to help it in their efforts of reviving their fortunes.

As part of this deal, Fiat would be using their successful Panda car for two new models: a revival of Fiat’s iconic Cinquecento, and a new Ford Ka that will be made at Fiat’s factory in Tyche, Poland. These models are expected to be unveiled in 2007 and the following year and the companies are looking for sales exceeding 240,000 annual units divided between the two models.

This is just many of the collaborations Fiat has entered in the recent times. They have collaborated with Suzuki Motor Corp. to work with the Japanese automaker on a small sport utility vehicle to be launched by next year. They are also co-developing diesel engines along with Suzuki in the Indian market. In addition, there are also reports in the market about their deal with Tata Motors in India.

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