17 October 2002: Fiat has been warned by GM that any change in control of the company might negate an agreement by which the Italian carmaker can insist on GM buying the remaining 80 per cent of Fiat in 2004.

The warning came amid speculation that the Italian government might take a share in the company in an attempt to help it deal with substantial losses.

Italian Prime Minister Silvio Berlusconi promised a 'strategic strengthening' of the car sector following a slump to a record low in Fiat's domestic market share and plant closures than laid off a fifth of Fiat's workforce.

Fiat is expected to lose at least E1 billion this year, and GM this week wrote down its $2.4 billion stake in the Italian company to just $220 million value. Fiat said in response that this did not reflect the true value of the company.

Fiat's share of Italy's car market has slipped to a record low of under 29 per cent.