ROME (Dow Jones) - Fiat SpA (FIA) and Ford Motor Co. (F) will make utilitarian cars together, a company official at the Italian automaker confirmed Friday.

"Fiat and Ford will make utilitarians together on the Panda platform," Lapo Elkann, in charge of brand promotion at the Turin-based car company, told Italian radio, adding the alliance was created for a single product.

Fiat this week launched an all-new, larger version of its best-selling compact Punto, which it hopes will rescue its auto unit's sales.

The two car companies expect to seal an agreement on the industrial alliance by the end of the year, a person familiar with the matter said Thursday.

Fiat and Ford are exploring ways to save money by building their planned small cars in Poland, the person said.

"The industrial agreement will be on one line of product," Elkann told Radio 24. "I can't tell if they will do more as they are still in talks."

Fiat has expertise in making small cars - such as the Panda and the new Punto unveiled on Tuesday. Fiat already produces its Panda at its factory in Tyche, Poland . It also manufactures its small multi-jet diesel engines at a factory in Poland .

More and more car makers are joining forces in ad hoc alliances to build specific models or components in an effort to save money on developmental costs, a trend that Fiat Chief Executive Sergio Marchionne said Fiat had to join.

Fiat Auto plans to invest around EUR10 billion in 20 new models between 2005 and 2008.

The auto unit, which accounts for around 40% of the Fiat group's revenues and has been losing money since 2000, is aiming to be in the black starting in 2007.

-By Luca Di Leo and Christopher Emsden, Dow Jones Newswires; +39-02-58-21-99- 05; chris.emsden@dowjones.com

(END) Dow Jones Newswires

09-09-05 0441ET Copyright (c) 2005 Dow Jones & Company, Inc. Copyright (C) 2005 Dow Jones & Company, Inc. All Rights Reserved.