Fiat inks joint-venture with China's Guangzhou

Adding to its automotive empire, Fiat announced on Monday that it has signed a partnership with Chin's Guangzhou Automobile Industry Group. The 50-50 joint venture will see Guangzhou building Fiat vehicles and engines in China by 2011.

Under the terms of the agreement, the automakers will invest 400 million euros in a new factory located in Changsha - the capital of the Hunan province. The plant will initially have the capacity to produce 140,000 vehicles and 220,000 engines per year, but those figures could eventually be ramped up to 250,000 cars and 300,000 engines annually.

The Fiat Bravo and Grande Punto will eventually be built in China, but the Linea will be the first vehicle launched in China as a result of the joint-venture. The Linea will be powered by two versions of Fiat's turbocharged 1.4L engine, one producing 120 horsepower and the other making 150 horsepower.

Although Fiat sells a few thousand vehicles in China every year, the Italian automaker hasn't built a car in China since its joint-venture with Naijing Automotive expired in 2007. Guangzhou is one of Chin's more experienced automakers, selling more than 530,000 cars last year, according to Automotive News. Guangzhou is also the Chinese partner of Toyota and Honda.