After several attempts, Chrysler LLC may have found a partner. Italy's Fiat SpA could take a big stake in the Auburn Hills automaker in exchange for providing small-car platforms and engines under discussions taking place.

Such a deal would allow cash-strapped Chrysler to quickly add small vehicles to its lineup and at little cost, while providing Fiat with an inexpensive ticket back into the U.S. auto market, people familiar with the situation said.

They said the talks are at an advanced stage, with Fiat likely to end up acquiring 30 percent to 35 percent of Chrysler.

Fiat declined to comment on the talks, first reported by the trade publication Automotive News Europe. Executives at Cerberus Capital Management LP, Chrysler's owner, were not reachable for comment Monday, and Chrysler declined to speak about these discussions specifically.

"Chrysler LLC as a matter of policy ... does not confirm or disclose the nature of its private business meetings," said Chrysler spokeswoman Lori McTavish. "Beyond those partnerships and alliances already announced, Chrysler has no further announcements to make at this time."

Compared with its larger Detroit rivals, General Motors Corp. and Ford Motor Co., which have vast European operations with small-car expertise, Chrysler does not have overseas subsidiaries that make small cars. The smallest model in its range is a compact.

Chrysler has concluded deals to obtain a subcompact from Nissan Motor Co. -- one based on the Nissan Versa that it will be able to sell in South America later this year, and another scheduled to go on sale in North America in 2010.

Chrysler also tried to procure small cars at low cost from China's Chery Automobile, but those negotiations broke down recently.

Fiat is a logical partner, said IHS Global Insight analyst Aaron Bragman. "This is one of the companies we've been saying would be a good partner for Chrysler because there is no overlap," he said.

A deal with Fiat would address Chrysler's strategic needs -- to add small models to a lineup of predominantly large vehicles -- as well as the concerns raised by U.S. politicians when Chrysler executives asked for government aid.

Under the terms of a $4 billion loan that Chrysler received from the government, the automaker is required to submit a plan demonstrating its viability by Feb. 17.

If a deal with Fiat "is a way for them to declare their viability, that's good," Bragman said.

But he said the arrangement does not address Chrysler's most pressing need -- more cash.

The company plans to ask the government for another $3 billion. Auto executives and industry experts say Chrysler is unlikely to find anyone else willing to inject cash. "Anybody who has it doesn't want to give it up because they don't know when there'll be any more coming from the banks," Bragman said.

Nissan's talks with Chrysler -- as well as GM's -- foundered because of the cash crunch that has exacerbated the weakness in the industry.

In November, GM suspended talks with Cerberus about a possible merger with Chrysler to address its own liquidity crisis, while Nissan CEO Carlos Ghosn has ruled out any deals requiring cash.

Cerberus acquired Chrysler from then-DaimlerChrysler AG in August 2007, but within months was looking for partners for the money-losing automaker.

A deal with Fiat would benefit the Italian company by allowing it to tap into Chrysler's production and distribution networks to fulfill one of Fiat CEO Sergio Marchionne's objectives -- to build and sell premium Alfa Romeo cars in North America.

With small cars such as Daimler AG's Smart two-seater growing increasingly popular in the United States, Fiat also is considering marketing its iconic Fiat 500 family of cars in North America.

Marchionne has said he wanted to bring the Fiat 500 to the United States, but only if he could produce it domestically to keep down costs and guard against the effects of currency swings.

He has spoken of Fiat's need to increase its volumes to ensure its long-term survival. The company has explored cooperative deals with German automakers, too.

Like the French brands Renault and Peugeot, Fiat fared poorly in the U.S. auto market and pulled out in the early 1980s. But Fiat retains a presence in the U.S. manufacturing sector through its CNH (Case New Holland) agricultural operations.