Lancia introduced its latest model last week: the 200 bhp Delta 1.8 DI TurboJet. Now rumours are steadily growing that the 103-year-old iconic Italian brand could face the axe following a Fiat-Opel merger.

With Fiat's detailed plans for a merger with Opel expected to be submitted to the German government tomorrow and as concern continues to grow for the future existence of the Lancia brand, Fiat CEO Sergio Marchionne has met this week with GM Europe's top executives to push his case forward.

As the Fiat CEO puts the finishing touches to his ambitious plans to create a new global automotive manufacturing powerhouse that would comprise of all of Fiat's automotive operations (except Ferrari and Maserati), GM Europe's Opel, Vauxhall and possibly Saab brands, as well as Fiat's newly acquired 20 percent stake in Chrysler, he met on Monday with GM Europe's chief Carl-Peter Forster along with Opel boss Hans Demant.

This meeting follows previous negotiations last week with German government officials who are trying to hammer out a viable future for the Opel brand; while Marchionne also wants to try to wrest control of GM's profitable Latin American and South African operations as part of any deal, although GM is reluctant to lose its control over these 'jewels'.

GM has been given a June 1 deadline by the U.S. Treasury Department to come up with a viable strategy for its future or face a court-administered Chapter 11 bankruptcy process, very similar to the procedure rival American carmaker Chrysler is now undergoing. In a sign that the Obama Administration is leaning further towards the option of Chapter 11 option is the news over the weekend that GM is to shed a big chunk of its North American dealer network: the legal structuring of GM's position with its dealers is quite different to that enjoyed by Chrysler dealers (whose network is to be trimmed by a quarter) and would be almost impossible to achieve outside the bankruptcy process.

With the Chapter 11 scenario looming large for GM, the German Economy Minister Karl-Theodor zu Guttenberg said yesterday that he might send a negotiating team to the U.S. later this week to discuss a solution for Opel if a buyer hasn't been found before any bankruptcy process occurs. Guttenberg favours a trustee system to administer Opel during the interim period although it is believed that GM has shown some resistance to this path. The trustee system he envisions would protect Opel from GM's creditors while its manufacturing operations would be supported by a bank bridging loan until a takeover was completed. The minister said yesterday that he was "optimistic in principle" that a trustee arrangement could be put into temporary place.

The German government expects detailed proposals for Opel's future to be handed in by tomorrow's deadline. Three bidders remain in the process with Fiat being the front runner, although Canadian-Austrian components and contract manufacturing firm Magna International, which is expected to see its bid supported by Russian financing, is the one more favoured by Opel's powerful unions which fear major job losses from Marchionne's proposals. The third interested party is U.S. private equity firm Ripplewood through its European arm RHJ. It has examined Opel's books, although it is still unclear whether it will put forward a proposal, and would be the rank outsider at best. Guttenberg expects to see the bids in tomorrow, although he was cautious yesterday, telling reporters that "we have to see what happens on Wednesday."

Fears are also rapidly mounting for the future of Fiat's 103-year-old Lancia brand as a merger between Fiat and GM Europe is expected to see a rationalisation in the number of brands that the combined entity would hold. Also under threat is GM's Saab brand which is currently being restructured though the Swedish bankruptcy system, a process that is similar to the U.S.'s Chapter 11. Meanwhile with rumours growing that Lancia could be jettisoned and that the Termini Imerese factory in Sicily that produces its key Ypsilon model could face closure or other manufacturing options, comes a report in Germany's Automobilwoche that quotes a "confidante" of Marchionne's as saying that Lancia would be dumped by the merged company. If Lancia's demise does come to pass it would produce ironies in that one of Marchionne's first decisions on becoming the Fiat boss was to dismiss a proposal by then incumbent Fiat CEO Herbert Demel to close the iconic brand down.