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GM, Fiat and Suzuki mull India alliance

NEW DELHI, July 26 (Reuters) - Automakers General Motors, Suzuki and Fiat aim to extend their global alliance to India to improve competitiveness in a market likely to be one of world's fastest growing this decade, Fiat India's chief said on Friday.

U.S.-based General Motors (GM), the world's biggest vehicle maker, bought 20 percent of Italy's Fiat Auto in 2000 and the two have a range of joint ventures including powertrain and transmission production and small car parts.

GM also owns a similar stake in Suzuki Motor Corp , Japan's largest mini-vehicle maker.

"Talks are underway (between GM, Suzuki and Fiat) to identify the main focus areas of product sharing, cross branding and sourcing of engines," Maurizio P. Bianchi, chairman and managing director of Fiat India Pvt Ltd said in a statement.

But he said it was still too early to comment on the framework of the cooperation being put in place.

The alliance in India would help the three tackle competition from eight other companies that crowd India's nearly 600,000-a-year new car market, including the local unit of South Korea's Hyundai Motor , Ford , Honda and local firm Tata Engineering and Locomotive Company Ltd .

These automakers have been drawn by forecasts of a 10 percent rise in annual car sales of over the next decade, fuelled by rising incomes in one of the world's fastest-growing economies that also has low car penetration.

Currently, Suzuki's 54.2-percent-owned Indian venture, Maruti Udyog Ltd, has a dominating 52 percent share of India's new car on the strength of its small, reasonably priced cars.

But its domination of the small car market has been recently threatened by new, more powerful and stylish models. Small hatchback cars make up nearly 85 percent of all car sales.

GM makes the German-engineered Opel Astra, Corsa and Swing models. The Astra is positioned in the upper end of the mid-size car segment and the Corsa in the lower end of the same segment but has a less than two percent share of the market.

Fiat India, 97 percent owned by the Italian automaker, makes the Palio and Uno hatchbacks and the Siena and Adventure sedans in India and has about a 10 percent market share.

Bianchi said Fiat had a lot of expertise in diesel engines and was working on introducing the 1.9 litre diesel engine for the Palio and the Siena which it would launch in early 2003.

Indian newspapers have speculated Suzuki might source a diesel engine from Fiat to boost the lure of its 10-model line-up that offers only one diesel variant. Diesel prices in India are a third cheaper than petrol, making them appeal to price-sensitive consumers.