The deal is also expected to result in Mitsubishi's gasoline direct injection engine making its way into several Fiat models. The two agreements are expected to be finalised towards the end of this month, and neither Fiat nor Mitsubishi rule out the possibility that this could lead to other technical co-operation deals.
A spokesman for Fiat Auto UK said: 'We are not talking about mergers. It is industrial co-operation on key projects, namely the 4x4 sports utility project and the introduction of GDI engines into Fiat cars. 'As yet nothing has been signed but talks are at a very advanced stage.' A new four-wheel-drive vehicle would both fill a gap in the Fiat range and renew Mitsubishi's already established 4x4 line-up. The Japanese company is already working with Italian design house Pininfarina in the development of a new sports utility vehicle based on the Shogun platform.