Ona-Offa - Italian Gov Official-"Fiat Not Planning to Sell Car Business

ROME, July 8 Reuters reported that Italian Industry Minister Antonio Marzano said on Monday that industrial group Fiat had assured him that contrary to speculation it was not planning to sell off its struggling car operations.

Asked by reporters if Fiat planned to sell its auto arm, Marzano replied: "I have had assurances from the company that this is not their intention."

There have been signals that the once dominant carmaker was thinking seriously about selling its loss-making auto unit to U.S. partner General Motors Corp. <GM.N>.

Fiat Auto has made an operating loss for three of the last four years and dragged the group to a 529 million euro net loss in the first quarter of 2002, forcing Fiat into a financial rescue package with banks, which sources say, favour the carmaker's sale.

GM bought 20 percent of Fiat Auto in 2000 for $2.4 billion in stock. Fiat has a put option to sell the rest "at fair market value" from 2004-2009.

The minister added that government incentives approved last week to boost the flagging car sector would translate into an additional 100,000 car sales this year alone.

The Italian government on Friday passed a decree suspending for three years car registration tax for people replacing old autos without a catalytic converter for environmentally-friendly compact cars.

"I don't know how much this will affect Fiat in terms of market share," Marzano added.

Fiat said in a statement on Monday that it would cut the price of cars that qualified for the tax breaks by at least the value of the government incentives.