Mazda Motor Corp. and Fiat SpA are working together on developing and manufacturing a roadster, or two-seater convertible, although the automakers will come up with different, distinctly styled models.
The deal with Fiat of Italy, which controls U.S. automaker Chrysler, serves as a perk for a money-losing Mazda and highlights the Japanese automaker's trademark product -- the best-selling roadster of all time.
Both sides said in a release Wednesday they had signed an agreement to work together, but each manufacturer will use its own engine and styling.
They declined to give details but said their cooperation on Fiat's Alfa Romeo model and a Mazda model will be based on Mazda's "next-generation MX-5 rear-wheel-drive architecture."
Hiroshima-based Mazda has been struggling, racking up four straight years of red ink, after its ties with U.S. automaker Ford Motor Co. weakened.
"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.
Fiat Chief Executive Sergio Marchionne said working with Mazda was part of an effort to grow into "a truly global brand" and deliver "an exciting and stylish roadster in the Alfa Romeo tradition."
Fiat has had a joint venture with Tata in India since 2006. Many automakers have their eyes on the growth potential of Asia amid a lagging European market.
Speculation has been rife that Mazda might need a partner, perhaps one of the emerging Chinese automakers, if it hopes to ride out the intense competition in the industry.
For the fiscal year ending in March, Mazda's losses ballooned from 60 billion yen to 107 billion yen ($1.3 billion) as vehicle sales declined across all regions except North America. It plans a return to the black for the fiscal year through March.