Fiat will manufacture its Alfa Romeo 159 for the Chinese market in a joint venture collaboration with Chery Automobiles of China. Chery, based in the eastern city of Wuhu, currently sells 10 models under its own badge and is one of China's largest car exporters.

The two companies announced having signed an agreement to produce 175,000 Fiat and Alfa Romeo cars per year in China from 2009 onwards, without disclosing any financial details.

Fiat SpA Chief Executive Sergio Marchionne, said the move was part of a larger strategy to expand Alfa Romeo worldwide. "The introduction of Alfa Romeo in China represents an historical step, launching one of the most attractive brands of the European car industry into the world's fastest-growing automotive market," Marchionne said in a statement.

Fiat SpA, of which Fiat Group Autos is a subsidiary, currently has six joint ventures and nine wholly foreign owned enterprises in China engaged in manufacturing and distribution of cars, commercial vehicles, agricultural and construction equipment and auto components.

The news comes a day after Fiat said it would source 100,000 1.6- and 1.8-liter engines a year from Chery to power cars manufactured by Fiat in China and abroad.

While Fiat said the deal would mark an historical step into "the world's fastest growing automotive market", Chery said the move would make its own brand more competitive worldwide.

Fiat has been struggling to turn around its operations in China. Its operation with Nanjing Automobile Corp remains has been making losses with sales at the end of June at 31,000 against the targeted sales of 300,000 vehicles in China by 2010.