Fiat and Mazda have decided to form an alliance to develop two-seater sports cars.
The alliance will work on a car for Fiat’s Alfa Romeo brand and a roadster with a different engine and styling for Mazda.
The cars will be built at Mazda’s plant in Hiroshima. Both will be based on a new version of Mazda’s MX 5 – the car that Mazda is best known for.
Mazda is looking to cut costs after losing $1.3 billion in its most recent financial year.
“Establishing technology and product development alliances is one of Mazda’s corporate objectives, and this announcement with Fiat is an important first step in that direction,” said Mazda President Takashi Yamanouchi in a statement.
Fiat chief executive Sergio Marchionne said working with Mazda would deliver “an exciting and stylish roadster in the Alfa Romeo tradition”.
Production of the Alfa Romeo model is planned to start in 2015.
Mazda had close ties with Ford and the US company owned nearly a third of Mazda in 1996.
But Ford has been winding-down that partnership over the last few years and now owns just 2% of the Japanese company.