Fiat may offer to raise car production in Italy 50 percent when it holds preliminary talks with the government on Tuesday, in return for tax breaks on some car sales and possible help in reducing labour costs.
Fiat CEO Sergio Marchionne says Rome's target for over 900,000 cars to be produced in Italy is "not astronomical" -- but the company will make only around 600,000 vehicles domestically this year, down from about 800,000 before the global financial downturn began.
The meeting on Tuesday between Marchionne, Industry Minister Claudio Scajola and a representative from Prime Minister Silvio Berlusconi's office, is seen as the opening of discussions and no agreement is expected at this early stage.
The crisis has already brought General Motors and Chrysler to the brink and they are now supported by Washington. Western car makers are increasingly looking to consolidation or at least tighter cooperation, often with Asian partners, to survive.
Fiat itself took a 20 percent stake in Chrysler earlier this year in the Obama administration's rescue deal.
"We are hoping for a strong commitment by Fiat, which is growing in the world, to also grow in Italy," Scajola said on the eve of the meeting.
Marchionne might shift some Fiat Panda production from an overstretched plant in Poland to help boost Italy output.
But with costs on his mind, he is likely to confirm plans to halt auto output at the company's expensive Termini Imerese plant by 2011.
There have been reports of interest in the plant, which is on the island of Sicily, from both India and China but industry observers say any foreign car maker would find the logistics as difficult as Fiat.
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