The sale allows struggling Fiat to raise cash quickly, and as the price paid is in line with analysts valuation of the company Fiat executives are reported as satisfied with the terms. Mediobanca will undertake the listing of their stake on the stockmarket, but with current market hostility to car manufacturers, it is expected that the IPO will be scheduled for mid next year. 

Gabriele Galateri moves across from his position as Chief Executive of the Agnelli family investment trusts, IFI and IFIL, strengthening the family's control over the uncertain future of the loss making company.

With gross debts of over €30 billion and plunging cars sales in their home market, Fiat's problems have been added to by credit rating agency, Moodys, who have downgraded their credit worthiness to one position above "Junk" status and added their view that an imminent sale of the auto division to GM as being the only viable option.

The sale of the stake is believed to be the first step in the stockmarket listing process which is expected to be finalised at a Ferrari board meeting on 8th July.

Forster's comments are the furthest a GM executive has gone in welcoming the prospect of closer intergration between the two companies. With Opel currently struggling to cut capacity and introduce new models to push forward a return to profitability, most observers see difficulties with Fiat Auto being in a similar situation.

He outlined the GM belief that the Opel brand had become staid and slipped downmarket in recent years, but that the intergration of Fiat, along with the recently aquired Daewoo car operations would allow GM to refocus. "I think we can create a perfect landscape of brands if the decision is made in two years time to come together," said Forster. "I believe that, potentially with the Fiat brand, it would allow us to further point and focus our Opel brand."

Adding Fiat would give GM a multi-brand approach similar to the biggest European group, VW/Audi. European operations would include Opel, Vauxhall, Saab, Fiat and Daewoo. He aso commented that closer joints parts purchasing and powertrain sharing were in everybody's interests. 

Further adding to Fiat's problems, Fresco added that he expects the European new car market to shrink by 5% this year, with the Italian market being one of the worst affected, up to 15% down on last year.

In a seperate developement US/European giant DaimlerChrysler quashed widespread rumours by announcing that it had no interest in aquiring Fiat's loss making car division, although a spokesman declined to answer whether there had been an contact between the parties. It is also believed that Fiat's banks and creditors are pushing for a sale of the lossmaking car division prior to the exercising of the 2004 GM option.

Boschetti expects Fiat to make "serious profits" by 2005 under his restructuring plan, evidence which will be required to show up in first half figures for that year, giving the Auto division a breathing space until accounting figures are released in July 2005. However the whole process will be constantly monitored and GM's option to buy could be exercised as early as January 2004 if cash continues to drain at an unsustainable rate.

At present it is difficult to put a figure on Fiat's value in an imminent sale to GM, the Auto division has a net debt of €1.7 billion, while the division is valued at between €4.4 and €5.5 billion by most financial analysts. On this basis if the shareholders were left with the debt, GM would pay between €3.5 to €4.4 billion for the remaining 80%, quite a good deal for the American giant bearing in mind they paid €2.4 billion for their 20% stake.

With Fiat Auto accounting for 42% of group sales, failure of Boschetti's plan would see the Italians left with no choice but to accept a GM takeover. With the imminent sale due of Fiat's Comau production systems unit, Teksid foundry business, Magnetti Marelli car parts division and possibly a larger offloading of Ferrari/Maserati shares in to upcoming IPO, to raise quick cash, a sale of the Auto division would leave the group comprising of CNH agricultural tractors and Iveco truck divisions, as the aero engine division and Toro insurance business would further need to be sold to bring the group into line.

Seperately, the removal of Paolo Cantarella is a personal victory for Umberto Agnelli, the 67-year-old young brother of honorary Chairman Giovanni Agnelli. Umberto controls the Agnelli family's 30% stake in Fiat which is held through IFI and IFIL, the family trusts which he runs, but has always been kept at arms length from Fiat affairs by Giovanni. Several recent attempts to replace Cantarella have failed, most recently a deal which would have seen Gabriele Galateri di Genola, the IFI chief executive replace 56-year-old Cantarella who would have been elected to the Fiat board and probably shunted off to run Comau, the division he ran until 1989, but this was scuppered by Giovanni at the last minute.

The ousting of Cantarella was planned for some months ago, mainly led by the three banks that have financed the €3 billion rescue package, which was negociated by Chairman Paolo Fresco and Galateri di Genola representing the Agnelli's shareholding and only presented to Cantarella to sign once completed in his capacity of CEO. What has suprised most people is that no name seems to have come to the fore as replacement CEO. Mentioned as in the frame are Franco Tato, until recently CEO of Italian Energy group Enel, and Enrico Bondi, currently CEO of Telecom Italia, a former head of energy giant Montedison, who in the past ran Fiat's defence and aerospace divisions. Both have strong reputations as cost cutters and would be expected to appeal to banks and creditors.

After the opening ceremony 10 Maserati's travelled in convoy to the famous Diaoyutai Residence, used by the Chinese Government to host lavish ceremonies. The first Maserati sold, a Coupe has gone to Mr Huang, a Beijing based property developer.

Maserati hope that their foothold in China will allow them to tap into a massive and quickly emerging market, adding another cog to the marques worldwide exposure programme.

Fresco who is 68, returned to Italy in 1998 to take the top job, after a long career in the US with the giant General Electric conglomorate, where he rose to the position of vice-chairman. Two years after arriving at Fiat he engineered the deal which saw General Motors take a 20% stake in the Italian car manufacturer, with the option of selling the remaining 80% on the table.

How long the appointment will last has not been revealed, but analysts see the problems, mainly stemming from the loss making Auto division, as clear cut and believe Fresco's experience ideally suited for the role. However it is unclear if the Agnelli family, who control Fiat, will sanction the sale of the remaining 80% to GM, which is believed to be the most attractive option available.

Since the compact family Palio went on sale earlier this year, 3,000 cars have been sold, in a segment where its biggest rivals are the VW Polo and the GM Sail. Last year passenger car sales in China topped 730,000 a figure expected to rise to 800,000 this year with the largest growth coming in the Palio's compact sector.

Cantarella, who is attributed with turning around the fortunes of the Fiat Group during the 1990's and building the company into a worldwide brand after an earlier difficult period. Shares in Fiat on the Italian bourse ended the day nearly 2% up on release of the news.

Honorary Chairman and major shareholder, Gianni Agnelli, who is recovering from surgery in the USA was said to be "deeply saddened" by the decision, after he had "watched him guide Fiat to success after success during the last six years as CEO".

As Fiat has plunged into the red, three major Italian banks recently agreed to loan Fiat up to £1.84 billion. Banca di Roma, IntesaBCI and SanPaolo IMI have also agreed to acquire 51 percent of Fiat's auto financing service. In return, Fiat has pledged to more than halve its net debt by year's end, from 6.6 billion euros (£4.27 billion) to 3 billion euros (£1.94 billion), embark on a major round of jobs cuts and sell off non-core assets.

Fiat Auto is 20%-owned by General Motors, with the American giant having an option to purchase the remaining 80% in 2004, although under the current climate speculation is rife that this could be accererated.