Reports: Chrysler, Fiat discuss partnership

Fiat is holding discussions with Chrysler about taking a stake in the U.S. carmaker and creating a partnership that would allow the Italian automaker to build and sell its small cars in the United States, two publications reported Monday.

Unnamed officials familiar with the discussions told The Wall Street Journal and Automotive News that Chrysler would have access to the automaker's engine and transmission technology as part of a potential deal.

Chrysler spokeswoman Lori McTavish said in a statement Monday that "in today's economic environment, talks are going on between companies in all industries — ours is no different." McTavish said Chrysler as a policy "does not confirm or disclose the nature of its private business meetings."

A Fiat official did not immediately comment on the reports.

Fiat Group, which sells cars under the Fiat, Alfa Romeo, Lancia and Abarth brands, has been trying to re-enter the United States for the first time since 1983. , Maserati and Ferrari are ealso part of Fiat. The company has expressed interest in bringing its Fiat 500 compact car and the Alfa Romeo brand to the U.S. market.

Chrysler, which is 80.1% owned by Cerberus Capital Management, has been hurt by its reliance upon slow-selling trucks and sport-utility vehicles and analysts have said it probably won't survive the year as an independent company despite receiving a $4 billion government loan.

The Treasury Department said Friday it will provide a $1.5 billion loan to Chrysler's financing arm, Chrysler Financial, and the automaker plans to offer zero-percent financing on several models and expand lending to car buyers with less than ideal credit.

Fiat's stock ended 4.9% lower at 4.48 euros, recovering some lost ground after earlier news that it could only meet its 2010 targets if the market returned to normal — something seen by analysts as being far from likely.

In an interview with Automotive News in December, Fiat Chief Executive Sergio Marchionne said Fiat needs a partner because it was too small to survive the crisis alone. He said automakers need to have scale — producing at least 5.5 million cars a year — to have a chance of making money.