* Deal to boost Fiat's commercial vehicle models
* To help Mitsubishi maintain production levels in Thailand (Recasts, adds details, shares)
By Agnieszka Flak and Yoko Kubota
MILAN/TOKYO, Sept 19 (Reuters) - Mitsubishi Motors will produce a new pickup for Fiat from 2016 in a deal to boost the Italian carmaker's commercial vehicle sales and raise output at the Japanese company's plant in Thailand.
According to a non-binding memorandum of understanding unveiled on Friday, the companies will team up to develop and manufacture the pickup which would be supplied by Mitsubishi and based on its best-selling model, the L200.
The mid-sized pickup, a long-promised addition to Fiat's Professional line-up, is one of five new light commercial vehicles it plans to deliver as part of its ambition to boost the division's sales by 40 percent to some 600,000 cars by 2018.
Mitsubishi's L200 pickup competes around the world against models such as Toyota's Hilux, Nissan's Navara and similar-sized pickups from Ford, Isuzu, Mazda and Volkswagen, among others.
The new pickup truck is meant to help Fiat increase its share of the Latin American market and help turnaround its loss-making business in Europe, the Middle East and Africa. However, it will probably do little to boost the carmaker's presence in Asia, which remains the main weak spot for the group.
It will help the Japanese automaker maintain production levels at its hard-hit plant in Thailand, where the company is facing a drop in sales and production due to a political crisis and declining demand for cars.
Fiat shares were up 0.6 percent at 7.82 euros by 1125 GMT, outperforming Milan's blue-chip index.
"The Fiat Professional unit is likely already making better margins then the average for the Fiat group and if the two companies share development and production costs, this should help that further," said a Milan-based analyst said who asked not to be named.
Mitsubishi, Japan's sixth-biggest automaker, is set to start manufacturing a re-designed L200, also known as the Triton, at its Thai plant later this year.
In early 2016, it will start producing a Fiat-dedicated line of the L200, which will be rebadged and sold under the Fiat brand, said Mitsubishi spokesman Tetsuji Inoue.
"This is beneficial for both companies because Mitsubishi Motors will boost production and Fiat will strengthen its product lineup," Inoue said.
Mitsubishi is expected to supply Fiat with 150,000-170,000 trucks over six years, although the figures have yet to be finalised, Inoue said, adding that the two companies were not considering any further cooperation.
Fiat Chief Executive Sergio Marchionne has promised a larger pickup truck in the past two business plans but the vehicles were never built. Marchionne again listed a mid-sized pick-up truck in an ambitious new business plan unveiled in May, which is meant to boost overall group sales by 60 percent to 7 million vehicles and increase net profit five-fold by 2018.
Fiat Professional's current lineup includes the Strada, a smaller pickup truck produced in Brazil and sold in Europe. It was the commercial vehicle division's top seller last year with deliveries of 134,000 vehicles.
Fiat is finalising a merger with its U.S. unit Chrysler. The combined Fiat Chrysler Automobiles is expected to list in New York in the middle of next month as it seeks to boost the global clout of the world's No. 7 carmaker.
While the carmaker has denied talk it is pondering tie-ups with Volkswagen and Peugeot, Marchionne said Fiat would consider cooperation with other carmakers on very specific projects.
Earlier this year, Fiat signed a deal with Renault for the French group to supply the Italian carmaker with a light commercial vehicle based on a Renault platform.
Friday's cooperation announcement with Mitsubishi is the second between the two auto groups this year after Chrysler, wholly-owned by Fiat, agreed to sell a rebadged Mitsubishi compact sedan in Mexico. This car is also made at Mitsubishi's hard-hit plant in Thailand.
Mitsubishi Motors' production in Thailand dropped 11.4 percent in April-July to 93,000 vehicles. (Additional reporting by Oleg Vukmanovic and Francesca Landini; editing by David Clarke)