Italian industrial group Fiat SpA says that its trucks unit Iveco has signed a framework agreement with Shanghai Automotive Industry Corp (SAIC) to develop a long-term partnership in the commercial vehicle business in China.

"But the time is not ripe now to reveal details of the partnership," an official from Fiat (China) Business Co Ltd, told China Daily yesterday.

The agreement marks a further important step in the consolidation of Fiat's presence in China, the group said.

Iveco now runs two joint ventures with Yuejin Motor Group in east China's Jiangsu Province to produce light commercial vehicles and gearboxes.

Iveco also has a joint venture with Changzhou Bus Corp in Jiangsu to make urban buses, coaches and chassis.

Fiat SpA's Fiat Auto has a joint venture with Yuejin in Jiangsu to produce Palio and Siena compact cars.

However, the group's vehicle sales in China lag far behind other global auto giants, such as Volkswagen, General Motors and Honda.

The group sold 56,000 automobiles in China last year, including 37,000 cars and 19,000 light commercial vehicles and buses.

The agreement is seen as another attempt of SAIC, the biggest car maker in China, to squeeze into China's fast-growing truck market.

SAIC signed a letter of intent with General Motors and Japan's Isuzu Motors in late 2002 to form a heavy-duty truck joint venture in Shanghai.

But they have not taken further substantial steps so far.

Earlier this year, SAIC also clinched an acquisition deal with a heavy-duty truck producer in Southwest China's Chongqing Municipality.

Total sales of trucks made in China grew by 25.7 percent year-on-year to 1.26 million units from January to October this year with heavy-duty truck sales rising by 44.5 percent to 317,700 units.

Car sales growth in China stood at 18.8 percent during the period.

Fiat SpA's total sales amounted to US$1 billion in China last year. It employs more than 10,000 people in China.

(China Daily December 9, 2004)