MUMBAI: Tata Motors Ltd. and the Fiat group on Tuesday announced the signing of a memorandum of understanding to establish an industrial joint venture in India to make passenger vehicles, engines and transmissions for domestic and overseas markets. Fiat and Tata vehicles both are to be made in Fiat's Ranjangaon manufacturing complex near Pune.

The facilities are expected to exceed an overall capacity of one lakh cars and 2.50 lakh engines and transmissions. Fiat will introduce, among others, its premium cars for B and C segments (Fiat Grande Punto and the new Fiat Sedan) and its successful small diesel engine.

Addressing the media, Ravi Kant, Managing Director, Tata Motors, said, "this will be an equal joint venture and the funding issues are still being worked out. The joint venture is for all the three products aspects and the Ranjangaon facility will be set up from scratch. Our facilities in Pune are reaching the saturation point and so we felt it is a good idea to go along with Fiat for jointly creating new capacity at Ranjangaon.''

Fiat and Tata also announced that they had agreed to enter into a 60-day study aimed at exploring industrial and commercial cooperation in Latin America. In particular, the study would focus on different vehicles, especially utility vehicles and pick-ups and explore the opportunity of using the existing Fiat production facilities in Cordoba, Argentina. Products made there would be sold in various Latin American and overseas markets under both the Fiat and Tata brands.

"Latin America is one area where we have no presence and Fiat has a very strong presence, particularly in Brazil,'' said Mr. Kant.

In his statement, Sergio Marchionne, CEO, Fiat group said, "as we said at the time we signed the distribution agreement in India, this is a strategic partnership which is evolving by leveraging on the respective strengths and continuously identifying new opportunities to be jointly exploited. Not only in India but also on a global scale.''

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