CHINA'S Nanjing Auto and Italy's Fiat SpA have agreed to invest an additional 3 billion yuan (US$400 million) in their troubled joint venture Nanjing Fiat, Xinhua news agency reported today.

According to earlier reports, Fiat was considering ending its partnership with Nanjing Auto because the Chinese side had delayed planned investment in the joint venture.

The two sides also reportedly were at odds over a potential tie-up between Fiat and rival Chinese automaker Chery Automobile.

"With the help of the government departments in Jiangsu province, the two companies became reconciled," the Xinhua report said, citing the Shanghai Securities News.

It said Nanjing Auto would have to rely on bank loans to make the investment in the Fiat venture because its financial resources were concentrated on resuscitating Britain's MG Rover Group, which it acquired in 2005.

Staff at Nanjing Auto were not available for comment early today. The report said Fiat would begin production of its D200 model in Nanjing.