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Fiat Working With Russia's Largest Car Maker

Memorandum of understanding between Italy's Fiat and OAO AvtoVAZ is the latest move in the Italian company's push to seek industrial alliances.

TURIN, Italy (AP) — Fiat Group has signed a memorandum of understanding with Russia's largest car maker, OAO AvtoVAZ, the latest move in the Italian company's strategy of seeking industrial alliances.
The agreement between Fiat and AvtoVAZ covers engineering and technical processes as well as the development, production and delivery of engines and other components, Fiat said in a statement released Monday.
While conditions and details of the cooperation — both short- and long-term — still were being worked out, the two companies planned to sign a final agreement over the coming months, the statement said.
Fiat already has a joint venture with another Russian automaker, Severstal Auto, to build and sell Fiat brand cars and commercial vehicles in Russia, with production is set to begin next year. The memorandum with AvtoVAZ would not affect this deal, the statement noted.
Under Fiat Group CEO Sergio Marchionne, Fiat has been focusing on industrial alliances and joint ventures to share costs and enter key markets. The group, once failing, returned to profitability in 2005.
Marchionne said that a cooperation with AvtoVAZ ''represents a significant step forward'' in such a strategy.
Last week, Fiat confirmed it had had contacts with Daimler but stressed it was premature to discuss alliances.
AvtoVAZ chief executive Sergei Chemezov said the memorandum was the ''most important stage in the Russian-European cooperation in the sphere of automobile production.''
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