Fiat Auto SpA and Iran’s PIDF, (Pars Industrial Development Foundation) Company have announced a co-operation agreement to manufacture and distribute Fiat cars in Iran.

Herbert Demel, president and CEO of Fiat Auto SpA, and Manouchehr Gharavi, chairman of PIDF Co, have signed a contract which will see the production of the Fiat Palio hatchback, the Siena saloon, the Palio Weekend Adventure station-wagon, the Strada pick-up, and an MPV version. It also includes the manufacture of bi-fuel vehicles, including Fiat Multipla and Doblò, powered by CNG (compressed natural gas) engines, at PIDF’s plant in Iran.

Production and distribution are expected to start in the second half of 2005. Annual output is expected to reach more than 100,000 units initially and to exceed 250,000 units when full capacity is reached. Overall industrial investment made by PIDF will total approximately €200 million (£693 million).