Fiat Group and Chrysler LLC are in negotiations to form a strategic partnership, a report from Automotive News Europe said on Monday.
The partnership could include a Fiat equity stake in troubled Chrysler and Fiat could give the American company, access to platforms, engines and transmissions, the source said quoting people familiar with the talks.
The deal could move forward Chrysler's restructuring plan ahead faster. The company last week received a $1.5 billion bailout last week from the U.S. government which was applied to providing consumer auto loans.
Fiat doesn't sell cars in the U.S. but the firm has been seeking to enter the U.S. market since before the crisis reached the auto sector.