Fiat may develop low-cost car with Tata

Venice (Italy): Italian carmaker Fiat is considering the idea of developing a low-cost car with its partner Tata Motors.

"It will be in the short term as they have already done most of the work," Chief Executive Sergio Marchionne said late on Monday at the end of a gala event celebrating the 100th anniversary of the Lancia, one of Fiat's three brands.

"We will add our know-how, and may be the money," he added. On July 25 Fiat and Tata announced a strengthening of their relationship with the creation of a joint venture to build cars, engines and transmissions for India and possibly other markets.

They already share a dealer network in India. After unveiling the latest versions of Lancia's Ypsilon city car at the event held in a hangar on Lido island, Marchionne reiterated the brand's aim to sell 300,000 vehicles a year by 2010.

In Italy, its main market, Lancia sold 70,194 vehicles during the first eight months of 2006.

Sold at a premium to Fiat's other mass-market models such as the Grande Punto, Lancia has a market share of about 4-5 per cent in Italy. The event, attended by hundreds of dealers is part of Fiat's efforts to revive the brand as the automaker comes out of a massive restructuring after nearly going bust earlier this decade.

The automaker's other two brands are Fiat and Alfa Romeo. Fiat has until September 30 to decide whether to buy back 11.7 per cent of luxury sports car maker Ferrari held by Italian merchant bank Mediobanca.

Fiat Chairman Luca Cordero di Montezemolo said the talks with the bank were going ‘very well’ and he expected a decision by that deadline.