Iveco, the commercial vehicle unit of Italian industrial group Fiat SpA, has teamed up with two Chinese motor vehicle producers to produce heavy-duty trucks and engines on the world's third largest auto market, China Daily reports Saturday.

According to a deal clinched between Iveco and the two Chinese partners -- the Shanghai Automotive Industry Corp. (SAIC) and Hongyan Automotive Co., Ltd. -- Iveco will set up a 50-50 truck investment joint venture with SAIC, one of China's top automakers.

If the joint venture is approved by Chinese regulators, Iveco will acquire a 67 percent stake of Hongyan Automotive Co., Ltd., a heavy-duty truck maker in southwest China's Chongqing Municipality, said a statement from SAIC.

Following the acquisition, Iveco and SAIC plan to increase Hongyan's annual output from current 15,000 to 40,000 heavy-duty trucks by 2008, using technologies from the Italian firm.

Iveco, SAIC and Hongyan will also build a truck engine plant in Chongqing with a designed capacity of 30,000 units a year by 2008.

"We expect the agreement will enable us to create a solid base for the supply of products and services at competitive costs in the Chinese market," said Paolo Monferino, Iveco's global managing director.

Iveco now runs a light truck joint venture in east China's Jiangsu Province. The venture has an annual output of nearly 20,000 units.

Source: Xinhua