Fiat and Mercedes-Benz are in talks to develop a new range of small cars, according to industry reports.Despite strong indications over the summer that BMW and Mercedes were poised to announce a small-car deal, it now seems possible that Fiat could help the German manufacturer replace its unprofitable A- and B-class models.Although it would not comment on the specifics of the Fiat talks, Mercedes’ parent company Daimler AG said that it was “ready in principle” to work with other car makers on “projects of mutual interest”.Mercedes’ interest is likely to be focused on the next-generation Fiat Grande Punto platform (which is long enough to replace the B-class) and Fiat’s small petrol and diesel engines. This chassis could also underpin much-needed new models for the Smart brand, such as a replacement for the short-lived ForFour and the stillborn baby SUV project.Any deal with Fiat would be a blow to BMW, which ideally also needs a partner to develop a new Mini family for 2010 and beyond, and had been rumoured to be in talks with Mercedes itself.With sales of the current Mini range unlikely to exceed 260,000 units, the unit cost of a car built on a unique platform will be higher than acceptable for a company dedicated to saving billions of euros over the next few years.
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