The Fiat Group has signed a joint venture agreement with Guangzhou Automobile Group Co Ltd for the production of cars and engines for the Chinese market.

The models will be produced with the latest in engine and transmission technology as the Chinese Government bids to drive down emissions in the country and pushes for the development of fuel efficient vehicles. The first model to be produced will be the Linea saloon car, with the first engines to be the Fire 1.4l 120hp and the 150hp T-Jet.

The vehicle made its debut at the Istanbul Motor Show three years ago having been developed by Tofas AS, a joint venture between Fiat Auto and Koc Holding. It was first manufactured in Turkey and marketed in a number of countries in 2007.

The joint venture will also call for the construction of a plant with more than a 7.5million square feet production area. It is expected that around €400million will be poured into the investment.

When the first phase of development is completed, the joint venture will have a production capacity of 140,000 cars and 220,000 engines. This plant capacity could even be increased to a maximum of 250,000 cars and 300,000 engines a year with production due to begin in 2011.

The project should be eligible for support from the development plan established by the Chinese government with the plant to be located in Changsha, the capital of the Hunan province.