German media reports this morning citing sources closely involved in the negotiations claim that Fiat is set to take a majority stake in General Motors' European businesses with a letter of intent to be signed next Tuesday. The report comes from Der Spiegel in today's on-line edition and is on the same day that Fiat Group reported that its revenues were down 25 percent to 11.3 billion euros in the first quarter of this year from 15.07 billion euros during the same period last year and that its Q1 loss was 410 million euros as a result of the global financial meltdown hitting car manufacturers hard.

There have been widespread rumours in recent weeks that Fiat is looking to forge an alliance with GM's divisions in Europe and Latin America. GM, which is currently being propped up by the U.S. Treasury Department and has until the end of the month to sort out a viability plan for its future survival is looking to offload its European divisions which trade under the Opel (in mainland Europe) and Vauxhall (in the UK) brand names. GM is in a similar position to Fiat's potential U.S. partner Chrysler in that it is being propped up by government loans. With the Chrysler deal hitting major obstacles and with just a week remaining until a 30th April deadline set by the Obama Administration to complete the deal with Fiat, the GM option represents another avenue for the future for Fiat to explore. In fact Fiat Group Chairman Luca di Montezemolo hinted last week that a "Plan B" exists if the Chrysler alliance fails to be enacted.

GM Europe spokesman Frank Klaas confirmed to AP today there are talks with giving details. "We're in talks with several investors," he told the agency. "We won't however provide any information on the current situation, on which investors are involved, and ask for understanding concerning that."

Meanwhile there was more talk this morning about a Fiat stake in GM, this time coming from the governor of the German state of Hesse, Roland Koch, who said that Fiat and car components manufacturer Magna International are both interested in taking a stake in Opel. He added that potential investors were "lining up" and that Fiat and Magna were both represented in that line, adding that it was good for Opel that there were competing investors.

If a deal with GM Europe goes ahead it would ironically come almost exactly four years after a previous relationship between the two carmakers ended acrimoniously when GM was forced to pay Fiat US$2 billion to extract itself from a 'put' option that could have forced it to buy out the remaining 80 percent of the Italian carmaker. That relationship had in fact kicked off in 2000 when GM had purchased a 20 percent stake in Fiat for US$2.4 billion and over the next five years there was widespread joint component purchasing, development of technology, and the use of commonly-developed platforms.