Italy's Fiat, which suspended co-operation with Nanjing Automobile (Group) Corp late last year, will soon close a deal with Chery Automobile to set up a new joint venture, a source said.
Jack Cheng, vice-president and chief procurement officer for Fiat China, said his company was negotiating with Anhui-based Chery to set up a joint venture. He declined to say when the deal could be clinched.
Chery Automobile, the fourth-largest carmaker on the mainland, signed a contract to sell engines to Fiat last August. The company sees that as a way to tap the western European market.
Both companies plan to further cement their tie-up by producing and distributing Alfa Romeo, and the branded cars of Fiat and Chery.
The Italian carmaker had seen sluggish sales on the mainland over the past decade.
Some industry experts said that was due to having a relatively weak partner.