Ford <a class=Fiat logo" src="" align="right" border="1" height="174" hspace="4" vspace="4" width="250" />

Ford Motor and Fiat Auto announced Monday that they have signed the final agreement for joint development and production of small cars for the European market. Two vehicles are planned, the new Fiat 500 and a replacement for Europe's Ford Ka.

The new cars will be based on Fiat's Panda platform, and manufactured in a Fiat facility in Poland. The cars will also use Fiat powertrains made in Poland and Italy.

Aside from the styling of the Ka-replacement (said to include key elements of Ford's new "kinetic" design language), Ford Europe will contribute its expertise in small car development and driving dynamics.

Both cars will hit the market in 2007-2008, with annual sales volume projected to be about 120,000 for each company.

[Source: Ford]

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