A merger of Fiat Auto with General Motors’ Opel operation would mean big job cuts for both groups, the online version of a German magazine quoted Opel’s workers’ council chief as saying, Reuters reported.

Fiat Auto, expected to lose over one billion euros this year, last week announced over 8,000 layoffs in a move which analysts said reflected the scale of its problems, Reuters said.

According to Reuters, Opel workers’ council chief Klaus Franz told Spiegel Online the problems at Fiat were just the “tip of the iceberg” and that there would be further job cuts and plant closures there.

If Opel merged with Fiat there would be “enormous job cuts for both sides”, the magazine quoted Franz as saying, Reuters said.

Fiat has a put option allowing it to sell the remaining 80% of the loss-making auto unit to GM from 2004, Reuters said, adding that GM this week wrote down $US2.2 billion on its 20% stake in Fiat Auto, having paid $2.4 billion for the holding in 2000.

Most analysts think a merger with Fiat Auto would damage GM’s chances of recovery in Europe, Reuters noted.

Reuters said that Franz, known for his outspoken comments, told Spiegel Online he feared the current restructuring at Opel would be put back by a merger with Fiat and that Opel would have to make more savings as the Fiat turnaround would cost over 10 billion euros.

“For us, niche models could be cut and plans for cars which have not yet been announced might be put to one side,” he was quoted as saying, according to Reuters.

Reuters said Spiegel Online also reported Franz as saying it was possible GM would only keep the Fiat brands that had potential in the US market, mainly Alfa Romeo.

“What remains of Fiat then and whether the brand survives is another question,” Franz was quoted as saying, according to Reuters.