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Fiat alliance talks with Daimler broad-based, not just on engines

MILAN (Thomson Financial) - Fiat SpA's possible alliance with Daimler brand Mercedes is broad-based and does not just involve engines, according to reports in Italian dailies that cited Fiat's CEO Sergio Marchionne. Il Sole 24 Ore cited Marchionne as saying that "with Daimler we are speaking about everything, not just engines".

Finanza & Mercati said this alliance could be reached by year-end.

According to the CEO, the group is ready to enter the US market not just through the Alfa junior model but also through the 500 model.

"We are observing the Smart phenomenon in the US. We'll see how it goes.

Technically we are ready," the CEO told daily la Stampa.

Mercedes launched the Smart model in the US in September.

Regarding the Alfa Junior model, Marchionne according to la Stampa noted that Fiat "created it for this objective. It is one of the models that we are assessing to export." According to Il Sole 24 Ore, Fiat's objective for 2008 is to exceed a market share in Italy of 25 pct. Currently it has a 24.1 pct share.

Il Sole cited Lorenzo Sistino, the new head of the Fiat brand, as saying that if government incentives to replace older cars with new models are renewed sales will stay at the same levels as 2007 or slightly less, but if they are not renewed Fiat estimates a drop of 100,000-150,000 units.

Il Sole 24 Ore also said Fiat aims to sell some 50,000-60,000 revised Croma models, the same target it had for the older model but which was never met.

The CEO also denied he would be interested in going to UBS or Alitalia SpA.

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