Ford, Fiat to produce small cars together

Friday, September 9, 2005

Italian-based Fiat Auto SPA and US-based Ford Motor Co. announced they signed an agreement to cooperate in designing two small car models. This came only seven months after General Motors severed their relationship with Fiat.

Both companies plan to work together on a new version of the popular Fiat Cinquecento and on a replacement for the Ford Ka, both to be based on the Fiat Panda platform.

The cooperation can help reduce the companies' small car production costs and ease financial difficulties they are facing. Ford is struggling with high labor and health care costs, while Fiat suffers from its unprofitable Italian plants.

After the deal was announced, shares of Fiat rose $0.06 to $9.44, while Ford gained $0.06 to $9.95 on the New York Stock Exchange (NYSE).

Sources

Aidan Lewis/Associated Press. "Fiat, Ford to work together on small cars" — BusinessWeek, September 9, 2005

"Fiat and Ford forge car alliance" — BBC News, September 9, 2005

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