Struggling U.S. carmaker General Motors Corp
Opel's works council head told German news agency dpa on Thursday that Fiat was poised to take over Opel, confirming a report by German magazine Spiegel Online that said Fiat would sign a letter of intent next Tuesday.
GM is also in talks to offload an Opel stake to Magna Steyr, a unit of Canadian autoparts maker
GM needs to sell a big stake in Opel to get 3.3 billion euros ($4.30 billion) in loan guarantees from the German government to rescue the troubled unit.
Fiat, Magna and Opel declined to comment.
Fiat Chairman Luca Cordero de Montezemolo denied last week any interest in Opel, despite a growing number of press reports citing the Italian car maker as possible buyer.
Fiat is also in partnership talks with another troubled U.S. group, Chrysler LLC
Shares in Fiat, which reported a first-quarter loss but confirmed its targets for the year earlier on Thursday, were up 1.2 percent at 7.56 euros in Milan.
In its statement on the results, Fiat said it would keep pursuing its strategy of targeted alliances while conducting talks with Chrysler.
The German state of Hesse, which is home to Opel's main plant in Ruesselsheim, said the report showed there were indeed parties interested in Opel, quashing speculation that GM would have a hard time finding an investor.
Magna and Fiat are among the possible partners. But it is also clear that there has been no decision yet, Hesse's premier, Roland Koch, said in a statement.
If Fiat fails to clinch a deal with Chrysler, some analysts have said it could turn to GM to gain the scale it needs to survive the worst industry crisis in decades.
But it remains to be seen how it would finance such a deal because Fiat already faces doubts about its ability to pay off 4.8 billion euros of debt due this year.
GM Chief Executive Fritz Henderson has said the car maker had reached out to more than six potential buyers, many of whom were financial investors.
But private equity firms are giving Opel the cold shoulder, leaving sovereign wealth funds from the Gulf or Asia as the most interested private investors, managers at buy-out firms have told Reuters.
(Additional reporting by Madeline Chambers in Berlin, Angelika Gruber in Frankfurt and Christian Gutlederer in Vienna; Editing by Andrew Callus.)