Lancia with PSA Peugeot-Citroen?

[Ryan]

Latest gossip is an Alfa Romeo - Maserati - Ferrari Group, with Fiat cars
going together with Opel and Lancia going together with PSA?
The daily news is almost funny, but I thought you all might be interested.
-------------
MILAN/Rome July 10 (Reuters) - Investment bank Mediobanca , a financial partner of Fiat SpA , plans to split the three brands within the Italian auto maker's car unit and forge alliances with other carmakers, a lawmaker familiar with those plans said on Wednesday.

Fiat has been dragged into the red by its struggling car unit and many analysts and politicians expect it to take up an option to sell Fiat Auto -- which includes the Fiat, Alfa Romeo and Lancia marques -- to partner General Motors Corp. in 2004.

But opposition politician Nerio Nesi said he was aware of an alternative plan being drawn up by Mediobanca, which has a 21.5 percent stake in Fiat's Ferrari sportscar unit.

Nesi, a former chairman of the lower house industry commission, said the plan included a deal between Lancia and France's PSA Peugeot Citroen but did not give details.

That would open the way for "a wide agreement for the rest of Fiat Auto with GM's European unit Opel," Nesi said.

A financial source familiar with the situation on Tuesday said Mediobanca's plan favors an "enlarged Ferrari," adding the high-end Alfa Romeo cars to Ferrari and its Maserati marque. The source said the rest of Fiat Auto would be sold under the plan.

Fiat declined to comment while nobody at Mediobanca was immediately available.

Poor results at Fiat Auto and a heavy debt pile have forced Fiat into a financial rescue package with banks, which sources say favor the carmaker's sale to GM.

However, industry experts say that GM is unlikely to accept taking on Fiat Auto without Alfa Romeo, its most prestigious brand.

Four of Fiat's creditor banks are due to meet the industry commission of Italy's lower house on Thursday which is studying the slowdown in the country's car market, which shrank 13.4 percent in the first half of the year.

Fiat's top management have already testified to the parliamentary body. The company earlier on Wednesday announced it would cut its output by a further 40,000 cars by temporarily laying off staff between Aug. 19 and Sept. 22, bringing this year's total production cut to 90,000 units.

The Italian government is still undecided as to whether Fiat should sell Fiat Auto to GM, which bought 20 percent in 2000. Fiat has an option to sell the rest of the carmaker to GM from 2004.

Industry Minister Antonio Marzano earlier this week said Fiat had assured the government it did not plan to sell Fiat Auto, but Chairman and co-Chief Executive Paolo Fresco has said that if the carmaker does not recover it could be sold.