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Chrysler, Fiat OK Russian deal

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Chrysler, Fiat OK Russian deal

Automakers agree to $3.3 billion joint venture with SOLLERS to manufacture cars, SUVs

Alisa Priddle / The Detroit News

Chicago --Chrysler Group LLC and Fiat SpA have signed a $3.3 billion joint venture with a Russian automaker to make cars and sport utility vehicles, including some Chrysler brands, in that country.

The deal, announced Thursday, led Sergio Marchionne, CEO of both Chrysler and Fiat, to cancel a speech to the Economic Club in Chicago in conjunction with the Chicago Auto Show.

The Russian deal involves Fiat and Russian automaker SOLLERS. A memorandum of agreement for the global alliance was signed Thursday with Russian Prime Minister Vladimir Putin in attendance.

"The deal comes under our strategy to strengthen Fiat and Chrysler's international presence and allow us to value our product and technological know-how, expand our geographic presence, increase our product offering and contain costs," Marchionne said.

The 50-50 partnership will be supported by a $1.64 billion loan backed by the Russian government, with the carmakers contributing technology and production capacity, the companies said.

The investment will result in Russian production of up to 500,000 vehicles per year by 2016 involving nine models to be sold in Russia as well as for export, Fiat said. The exports, at least 10 percent of production, are intended for Europe, but that plan could change between now and 2016, the company said. The lineup will include compact and mid-size cars and SUVs, including Chrysler vehicles. Of the nine vehicles, as many as six will come from a new global midsize car platform Fiat is engineering for future Fiat and Chrysler brands.

Fiat has always been weak in emerging markets outside Brazil, so this is a good step in the right direction, said Gabriele Parini, an analyst at UniCredit SpA in Milan. "The targets are ambitious and it will take time to set up production and gain market share."

The Fiat/SOLLERS project is in Naberezhnye Chelny, east of Moscow in the Republic of Tatarstan. A plant will be expanded and a supply park added. An engineering center will make adaptations to the global vehicles for the Russian market.

Bloomberg News contributed

From The Detroit News: http://detnews.com/article/20100212/AUTO01/2120347/1148/auto01/Chrysler--Fiat-OK-Russian-deal#ixzz0fLAA0mq0

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