Fiat and PSA currently have several joint ventures; for Fiat these cover the Fiorino (bottom with Peugeot branding), Scudo and Ducato light commercial vehicles, while the MPV alliance includes the large Fiat Ulysse (top) and Lancia Phedra 'minivans'

Italian media reports today have suggested that Fiat Group is exploring a potential tie up with French carmaker PSA Peugeot - Citroën, news that comes just a matter of days after Fiat CEO Sergio Marchionne claimed that the Italian firm would need a new partner to help it survive the global economic downturn. The speculation that Fiat Group could form a partnership with French carmaker PSA comes from the Milano Finanza newspaper which cities unnamed sources close to Italian Premier Silvio Berlusconi's office.

Last week Marchionne told Automotive News Europe in an interview that "you need at least 5.5 million to 6 million cars [per year] to have a chance of making money. Fiat is not even halfway there, and we are not alone in this. So we need to aggregate, one way or another."

PSA and Fiat Group manufactured around 6.2 million cars last year if their sales totals are combined, bringing it onto a par with the clear European sales leader, Germany's giant VW Group. PSA is presently Europe's second biggest carmaking group. A resulting company would become the fourth-biggest in the world, behind Japan's Toyota, and the American duo, General Motors and Ford, and it would be roughly equal in output to VW Group (which includes the VW, Audi, Skoda, SEAT, Lamborghini and Bugatti brands) and the Renault-Nissan alliance (which also includes Renault's 'low-cost' Dacia brand).

Milano Finanza claimed today that Berlusconi and the French President Nicolas Sarkozy have discussed the idea, which comes at the same time that the Italian premier is coming under increasing pressure to provide Fiat with state support. It also comes just days before Berlusconi is due to meet with Fiat Group Vice-Chairman John Elkann, Gianni Agnelli's heir. The economic downturn presently gripping the world has seen a dramatic reduction in car sales in the last half of this year and in the next few weeks Fiat will be shutting most of its plants for around month in order to reduce stockpiles and adjust to weaker consumer demand.