"Between the two groups, there is talk about Chrysler possibly using Fiat technology in exchange for a stake," a source said, speaking on condition of anonymity.

The source said a deal with Fiat would help Chrysler make vehicles that produce fewer harmful emissions.

"To get financing, US (car makers) have to show that they are really committed to developing over the short term a new family of vehicles that pollute less," the source said. "By itself, Chrysler would not be able to meet this condition."

The talks between Fiat and Chrysler were reported by auto industry publication Automotive News Europe earlier in the day on its website (http://www.autonews.com).

The publication cited unnamed sources as saying Fiat could take a stake of up to 35 per cent in Chrysler and give the US automaker access to platforms, engines and transmissions.