Fiat Auto has warned that thousands of Italian jobs could be lost because of cutbacks which aim to lift the indebted car maker back into the black.

Some 12,000 jobs are at risk and the entire Turin industrial system is in danger

Giorgio Airaudo Trade union representative

"It is not crazy to think the impact could be close to 10,000 workers everything considered," Fiat chairman Paulo Fresco told the local newspaper La Repubblica.

Trade union officials feared even this higher estimate could be too low.

"Some 12,000 jobs are at risk. The entire Turin industrial system is in danger," said Giorgio Airaudo, secretary of the Turin branch of the Fiom Cgil union.

Government involvement

Concerns about the industry wide impact of last week's decision to cut 2,800 jobs in Fiat's Italian factories have spread to government level.

Last Thursday, the Italian Prime Minister Silvio Berlusconi said the government would consider bailing out Fiat Auto.

His comments came ahead of a meeting on Friday between Fiat's chief executive Paolo Cantarella and Labour Minister Roberto Maroni.

Further meetings are believed to have been scheduled for Tuesday and Wednesday this week.

Falling sales

Fiat Auto, which is 20% owned by General Motors and 80% owned by the Italian industrial group Fiat, has been hit by falling car sales.

In its key home market, car sales fell 18% during March and 13% during April while the May figure is expected to record a 13-15% fall, according to preliminary data from the automotive research organisation Centro Studi Promotor.

During the first three months of the fiscal year, Fiat Auto clocked up 529m euro (£333m; $487m) losses.

Fiat Auto's head, Giancarlo Boschetti, on Friday warned sales could "be even worse in the near future".