Turin, Italy – Fiat may abandon plans to form a partnership with Chrysler unless the automaker’s unions accept substantial cuts in labour costs by the end of the month, according to Automotive News.

Fiat CEO Sergio Marchionne said that he could become Chrysler’s CEO if the deal goes ahead. The Obama Administration made a government-approved alliance of the Italian and American companies by April 30, 2009 a condition of US$6 billion in further funding to support Chrysler through the economic crisis. Marchionne said he would not ask the government for an extension to complete the deal.

Marchionne also denied that Fiat is considering buying Saturn from General Motors if the Chrysler deal does not work out.

In an interview with the Globe & Mail, Marchionne said there is only a 50/50 chance of a partnership being formed with Chrysler because of a lack of progess on labour negotiations, especially with the Canadian Auto Workers Union (CAW).

The report said that Fiat is not interested in obtaining specific Chrysler assets from an eventual bankruptcy sale, but wants an alliance with a full-fledged North American automaker. A deal with Chrysler would give the American automaker access to technology for smaller, more fuel-efficient vehicles, while giving Fiat access to an existing distribution network for its products.

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