Milan/Paris - Italy's Fiat confirmed it was in talks with Chrysler over taking a stake in its US rival.
Fiat's vice-chairman John Elkann said the company was in talks with Chrysler after reports said they could lead to the Italian carmaker buying a stake in its beleaguered US rival and the two companies looking to slash costs by combining production platforms.
The stake could be up to 35%, Automotive News Europe reported on its website.
"Between the two groups, there is talk about Chrysler possibly using Fiat technology in exchange for a stake," a source told Reuters, speaking on condition of anonymity.
The source told Reuters a deal with Fiat would help Chrysler make vehicles that produce fewer harmful emissions, improving its case for accessing US government funding.
Chrysler, the number three US-based automaker behind General Motors Corp and Ford Motor Co received $4 billion of US government loans to avert collapse and chief executive Bob Nardelli said last week it was counting on $3 billion more.