U.S. car maker General Motors Corp is eyeing a stake in Fiat SpA's car business in exchange for its European and Latin American operations, the New York Times reported on its website.

As part of a massive restructuring to stay in business, GM is in talks with the Italian company about the sale of the U.S. car maker's German unit, Opel, which could eventually lead to plants being shrunk across Europe, according to a German newspaper.

GM wants at least 30 percent of Fiat's car business, known as Fiat Group Automobiles, the New York Times said, citing people close to the negotiations.

Fiat Chief Executive Sergio Marchionne, meanwhile, is willing to give up less than 10 percent, the people said.

GM sees its Latin American business as a bargaining chip because it is profitable. The biggest market in the region, Brazil, is also important for Fiat because it is responsible for nearly all of the profit earned at its car business.

A Fiat spokesman declined comment, while GM could not be immediately reached for comment by Reuters.

Fiat shares were off 0.76 percent at 7.825 euros in Milan.

Fiat is also trying to survive an industry crisis by building up scale rather than selling assets. It entered talks to take over Opel soon after agreeing to form a partnership with Chrysler LLC .

Marchionne told Bloomberg on Wednesday he would become chief executive of Chrysler if the U.S. car maker manages to come out of bankruptcy.

If he reaches a deal with GM to take over Opel, it might eventually spin off the combined car group and list it on a stock exchange.

The latest newspaper report on Fiat's plans for a combined group in Europe said it would shrink plants across the region.

Citing a 46-page proposal codenamed Project Phoenix, Germany's Handelsblatt said on Thursday Fiat would shrink factories in Britain, Italy and Germany.

In addition to GM's Latin American business, Fiat was interested in the one it had in South Africa, it added.

GM is running due diligence on about 10 bidders for Saab, after the first round of bids for the Swedish brand attracted Chinese automakers, European investor groups and private equity firms, a source familiar with the matter told Reuters on Wednesday.

Although Fiat did not figure in the first round, it has expressed interest in the brand.

(Reporting by Ajay Kamalakaran in Bangalore; writing by Gilles Castonguay; editing by Karen Foster and Rupert Winchester)

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