(Releads with Mexico deal)
TURIN, May 19 (Reuters) -will drive into the Mexican market later this year under a deal to sell its cars through a new network managed by U.S. partner .
In a statement released on Monday, loss-makingsaid it expected to sell up to about 20,000 units a year in Mexico and hailed the agreement as a further strengthening of its three-year alliance with GM.
GM owns 20 percent of Fiat Auto, which posted a record operating loss of 1.3 billion euros ($1.52 billion) last year.
The U.S. giant has not yet agreed to take part in a five billion-euro recapitalisation of the car unit but Fiat has said GM can help Fiat Auto by extending cost-saving agreements that originally covered their powertrain operations and parts buying.
Last week, top managers from Fiat and GM met in New York for talks that Fiat CEO Giuseppe Morchio said went very well.
Under the Mexico deal, GM will open a new distribution network and start selling Fiat's Brazilian-made Palio models from the third quarter of this year. Other models will join them later with all sales and customer care in GM's hands.