A source familiar with Fiat’s future plans told Automotive News Europe, that the company’s Zastava plant in Serbia will build a new Fiat minicar smaller than the Fiat 500. The plant will also produce a new family of low-cost models that will debut in 2010 for central and eastern Europe.

The model to be built is dubbed the Topolino, an iconic two-seat minicar that Fiat introduced in 1936 called the Topolino 500. Based on the A-platform used on then Fiat 500 the Topolino will be a four-seater car. However, the platform will be reduced by 3150mm in length.

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Fiat has already confirmed that it is working on a gasoline and diesel hybrid-drive system for its small cars and vans that could hit the streets by 2011. AutoExpress now brings us some info on the Fiat 500 hybrid which could provide outstanding fuel-economy and extremely low CO2 emissions.

Sources say that the upcoming 900cc 2-cylinder engine will be mated with a motor and battery pack and will allow the 500 to run a short distance on electricity alone. Mated with the stop-start system and a VW DSG style dual-clutch gearbox, the 500 hybrid promises CO2 emissions of below 90g/km.

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We just reported last night about Nissan and Chrysler expanding their product development alliance and today news comes out of Germany that Chrysler is in talks with Fiat on a possible cooperation agreement for production of Alfa Romeo cars in Chrysler’s U.S. factories.

Handelsblatt newspaper is saying that talks between the two companies have advanced. “Handelsblatt has learned Chrysler could produce the cars for Fiat subsidiary Alfa Romeo,” the newspaper wrote on Tuesday. “Industry sources say the talks are moving forward.”

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Italian automaker Fiat is currently developing a gasoline and diesel hybrid-drive system for its small cars and vans that could enter production by 2011. Listen guys, if you end up producing a Fiat 500 hybrid, we beg you to bring it to the U.S.

“We are still in the research phase and, if everything proceeds as expected, we could begin production within three years,” Alfredo Altavilla, CEO of Fiat Powertrain Technologies, told Automotive News Europe.

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According to Friedrich Eichiner, a BMW’s board member for corporate and brand development, BMW will decided by the end of the year whether or not it wants to sell engines and other components to rival automakers. When asked if he meant GM, Daimler and Fiat, Eichiner said: “We are talking with those companies you mentioned.”

Selling engines and other components to other automakers is part of CEO Norbert Reithofer’s Number One strategic plan to boost profitability. Selling engines to GM and Fiat, BMW will be able to increase revenue and reduce spending by spreading out the development and production cost over its engine and transmissions.

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Alfa Romeo withdrew from the U.S. market back in 1995 but now is headed back to the stateside with a whole new vehicle onslaught and could be moving its production to the U.S. as well. Fiat is considering moving Alfa Romeo production to the U.S. and is already in talks with domestic automakers about sharing manufacturing facilities.

“I’ve always had the view that we had to produce in America,” Fiat’s CEO Sergio Marchionne said in an interview with the Financial Times. He said that he plans to start North American production of Alfa Romeo badged cars by late 2011 or 2012.

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Fiat revealed its long-awaited 500 Abarth at the 2008 Geneva Motor Show earlier this month. AutoCar is now reporting that Abarth is creating a new version of the speedy Fiat 500.

Word on the street is that Abarth and Fiat are working on a convertible version of the minicar that could go on sale as early as 2009. The report also said that Fiat is also considering two Abarth-only models that will follow the Fiat 500 Abarth Convertible.

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According to a report by the Financial Times Deutschland BMW is in talks with GM and Fiat to sell its rivals its own engines and transmissions. The newspaper cited company sources that talks are currently being held while BMW is also in talks with Mercedes-Benz on a partnership in the compact segment.

Selling engines to GM and Fiat, BMW will be able to increase revenue and reduce spending by spreading out the development and production cost over its engine and transmissions.

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Fiat is increasing production capacity for its 500 minicar to 190,000 units a year in order to meet increasing demand. Fiat initially planned to produce 500 units a day, but in early March, capacity at the Tychy, Poland assembly plant will grow to 750 units.

Fiat had originally planned to produce 120,000 units in 2008, the 500’s first full year, but dealers received 160,000 orders for the minicar between July 2007 to the end of January 2008.

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Fiat has suspended production of its 1.3 liter Multijet diesel engine that is used in its Fiat 500 model because of quality control problems. Fiat said that the hold up in the production will have affects on its deliver volumes for February.

“A number of anomalies have emerged with regard to an externally-supplied component for the 1.3 Multijet engine,” Fiat said in a statement.

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Besides the 135hp Fiat 500 Abarth, Fiat will also show a brand new concept car at the Geneva Motor Show called the 500 Aria, a greener version of the popular minicar.

The Fiat 500 Aria is powered by a 1.3-liter 16v Multijet diesel engine with a robotic Dualogic shift and stop-start technology which reduces fuel consumption by 10 percent.

Check out the press release after the jump.

Fiat 500 Aria Gallery:

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Fiat has finally released official images of the long-awaited 500 Abarth, of which we’ve seen numerous spy shots. The Fiat 500 Abarth will make its official debut at the 2008 Geneva Motor Show next month and will hit European markets in July.

Powered by Fire 1.4L 16v turbo engine, the 500 Abarth produces 135 horsepower with a peak torque of 151 lb-ft of torque. The car also gets a new Fiat feature called the Torque Transfer Control system, which improves the transfer of drive torque to the wheels and ensures that it handles impeccably on bends.

We’re wondering if the Fiat 500 Abarth SS is still in the works.

Fiat 500 Abarth Gallery:

Fiat will be launching its new Fiat 500 in the UK with a flight in one of the capsules on the British Airways London Eye. The new Fiat 500, which has recently been voted Car of the Year 2008, will take off on Monday, January 21 at 8:00pm – exactly 500 hours into the New Year.

At the launch, Fiat has prepared a huge celebrity event that will feature live bands, top presenters, and a light show.

FIAT UK Marketing Director, Elena Bernardelli, says: “It will be a great event, and we at Fiat are committed to making the country smile for the night.”

Click through for images.

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