Strengthening their alliance further, Italian auto major Fiat and India’s Tata Motors, on Thursday, entered into a joint venture to produce cars, engines and transmissions.

Under the 50:50 joint venture agreement, the partners will manufacture passenger cars, engines and transmissions for Indian and overseas markets at the Ranjangaon facility in Maharashtra. The overall investment in the facility would exceed $650 million, Tata Motors said in a statement here.

“The progress of all the joint initiatives between the Fiat Group and Tata Motors reflects the strong potential of our relationship in India and abroad,” Tata Motors Managing Director Ravi Kant, who will also be the Chairman of the JV, said.

The JV will manufacture Fiat’s premium cars, Grande Punto and Linea (respectively in the B and C segments), its 1.3 litre Multijet diesel engine, 1.2 and 1.4 litre Fire gasoline engine and matching transmissions, the statement said, adding one of Tata’s next generation vehicles would also be manufactured at the unit.

The Ranjangaon unit is expected to exceed an overall output of 100,000 cars and 200,000 engines and transmissions. The plant will directly and indirectly employ more than 4,000 people, it added. Assembly of new Fiat Palio at Ranjangaon has already commenced.

Good rapport
Commenting on the signing of the agreement, Fiat Powertrain Technologies CEO & Fiat Group Automobiles Senior Vice-President Business Development Alfredo Altavilla said, “The signature of JV in India and continuous development of new opportunities confirms strong motivation and understanding between Fiat Group and Tata Motors.” Mr Altavilla will be Vice-Chairman of the JV, while Mr Rajeev Kapoor has been appointed as President & CEO of the new entity. The two companies had signed an agreement in March last year under which distribution and service of Fiat branded cars in India is managed by Tata Motors. The statement said the agreement will continue.