Italian auto group Fiat SpA's chief executive Sergio Marchionne is sending mixed signals about his company's potential tie-up with troubled US carmaker Chrysler.

Marchionne said in Zurich on Wednesday that Fiat is still aiming for a deal with Chrysler but will not ask for an extension on the deadline for the talks.

''I still intend to reach a good conclusion,'' Marchionne said, speaking at a press conference. ''There is not a single reason why Fiat cannot close by April 30.''

"The objective is to avoid Chapter 11. People would do it if necessary. Our preference is to find a solution with the US Treasury, (unions) and lenders that would allow for a smooth transition to a new Chrysler," the Fiat chief said.

However, Marchionne said in an interview with a Canadian newspaper that there was only a 50-50 chance of a deal succeeding because of lack of progress in talks with union leaders.

The Fiat chief warned that the Italian auto maker could walk away from the deal if American and Canadian unions do not agree to significant pay cuts.

''Absolutely we are prepared to walk. There is no doubt in my mind,'' Marchionne said in the interview, adding that he cannot commit to this organisation unless he sees light at the end of the tunnel.

''If one road goes nowhere, we'll try another. We'll find something somehow. There are lots of plan Bs,'' he said.

''We are looking at everything in terms of strategic alliances in Europe, North America, everywhere. We answer the phone to everyone who calls.''

Canadian Auto Workers (CAW) president Ken Lewenza took offense at Machionne's Toronto comments, which he interpreted as being aimed at the CAW, which must meet a Canadian government deadline of April 30 for concessions.

''He restructured Fiat, but didn't attack the Italian labor movement, he did not attack the collective bargaining rights of employees in Italy,'' Lewenza said. ''I would ask why he would do that in Canada.''

The US government had insisted that Chrysler strike a deal with Italian auto major Fiat SpA by 30 April to be eligible to receive government support. (See: Fiat CEO Sergio Marchionne thanks Obama for facilitating Chrysler deal).

The deal with Chrysler was first announced in January but has been modified as Chrysler continued its talks with the US government aimed at securing fresh funds.

In the latest version of the deal, Fiat would take an initial 20 per cent stake in Chrysler in exchange for the technology to make small cars and access to foreign markets.

CAW's talks with Chrysler and Fiat will resume on Monday, Lewenza said. Over the past 10 days, their discussions have been put on hold as Chrysler attempts to win concessions from its US secured debt holders.

Those negotiations are being led by a committee of top debt holders - JP Morgan Chase, Citigroup, Goldman Sachs, Morgan Stanley and hedge fund Elliott Management.

Two weeks ago the team met senior officials of the Obama administration, and the government presented an offer that allows debt holders to recover about $1 billion of the $7 billion owed them.

The senior creditors, which also include about 40 hedge funds and other investment firms, are expected to present to senior administration officials a counteroffer within the next several days.

Also, there were reports that Marchionne would not rule out a sell-off of Chrysler assets, such as factories, brands and intellectual property, if the Canadian Auto Workers doesn't agree to large wage cuts.

He also did not reject the possibility he would become chief executive of a Chrysler-Fiat alliance, but added ''the title is not important. What's important is that they hear me.''

Marchionne has been Fiat's chief executive since June 1, 2004, and took over the leadership of the company when it was near bankruptcy.

Since 2007, Chrysler's chairman and CEO positions have been held by Bob Nardelli, appointed by Chrysler's private equity owner Cerberus Capital Management.

Chrysler, owned 80.1 per cent by US private equity firm Cerberus Capital Management and 19.1 per cent Germany's Daimler AG, lost $8 billion in 2008 and said it expects to narrow that to $1.1 billion for 2009.

Fiat ended 2008 with 5.9 billion euros of industrial debt.

Government incentives have helped car sales in Italy and several other European countries in the first quarter. Fiat's market share in Europe in March 2009 was around 9.2 per cent, a tad above 9.1 per cent in February.