Fiat to Produce Cars With Soviet Union : Trade: The deal calls for production of 300,000 cars a year. Italians are hoping for a bonanza.

Italian motor giant Fiat signed a landmark car production deal with the Soviet Union today, setting the tone for what the Italian government and industry hope will turn into an export bonanza to the East Bloc.

Fiat Spa will set up a joint venture with the Soviet Union to produce 300,000 cars a year for both the Soviet domestic market and export to the West, Fiat Managing Director Cesare Romiti told reporters.

The deal is the largest of several to be signed with the Soviet Union this week, with Soviet leader Mikhail S. Gorbachev due to start a three-day visit to Italy on Wednesday.

Many other Italian companies are signing new contracts or taking existing deals a stage further, often resulting from contacts made during a major trade exhibition Italy staged in Moscow last year.

Italy is Moscow’s fourth-biggest Western trading partner and has a long history of economic ties with the Soviet Union.

Under the Fiat deal, production at the Yelabuga plant, southeast of Moscow, would start in late 1993 or early 1994. Fiat is taking a 30% stake in the project and the Soviet state-run company Elaz the remaining 70%.

Romiti, who signed the accord with Soviet Automotive Industry Minister Nikolai Pugin, said the joint venture’s A-93 car would not be based on the Fiat Panda but would be a new vehicle developed jointly by Soviet and Italian technicians.

He said it would be a three-door or five-door sedan model, 11 feet long, with a maximum speed of 95 m.p.h.

“It’s a new car which should be able to compete with Western vehicles but is also adapted for use in the Soviet Union,” he said.