Chrysler president and vice chairman Jim Press has insisted the partnership with Nissan Motor is continuing despite a Japanese news report claiming Nissan had shelved it.

Chrysler more recently signed a non-binding agreement that would give Fiat a 35% stake and help getting re-established in North America in return for access to small car expertise inclusing engines, platforms and technology.

Press didn't provide further details in a speech at the Chicago motor show but, according to Dow Jones, said later that Chrysler and Nissan had only this week discussed changes to the interior of the planned Dodge Hornet.

Japan's Kyodo News, citing sources close to the deal, had said Nissan had suspended preparatory work for the Chrysler deal. It had said earlier this week it would revise its product portfolio, including the cancellation of selected future programmes as it forecast its first annual operating loss in 14 years for the fiscal year to 31 March.

The Chrysler-Nissan alliance announced last April that Nissan would build a "fuel-efficient" new segment small car for Chrysler to sell in North America, Europe and other global markets in 2010. It would be manufactured at Nissan's Oppama plant in Japan. Chrysler in return would supply a US-built full-size pickup truck to be sold in North America under the Nissan badge from 2011. Nissan currently builds its own Titan line in the US as well as SUV spin-offs badged both Nissan and Infiniti.

That announcement built on a deal announced in January 2008 for the supply of a new car based on Nissan's Versa sedan for Chrysler to sell in South America from 2009.

Last December, Chrysler said it had ended a deal, announced in July 2007, which would have resulted in Chery manufacturing small and subcompact cars - likely reviving the Dodge Hornet nameplate - for Chrysler in China. Initial sales were planned for Latin America in 2008-2009 with North American and European sales starting later. But the venture encountered delays over quality issues.

Press also cautioned that the industry should not expect a rebound to historic sales levels when the economy rebounds, Dow Jones noted.

"We need to accept and come to grips that sales could stay at this 10m level for four more years," he said.

Chrysler, along with GM, is finalising a viability plan for the US treasury due on 17 February as part of recent federal bailout loan agreements.