Fiat Auto's losses are dragging down the rest of the group

The firm's net loss of 1.5bn euros ($2bn; �1bn) in 2004 - after losing 1.9bn the year before - came thanks to a turnaround at its truck division.

But its car division is continuing to underperform, with Fiat Auto making an operating loss of 840m euros in 2004.

The firm reached a $2bn settlement with US giant General Motors earlier this month to end a joint venture.

GM wanted an end to a deal which could have forced it to expand its small stake in Fiat to outright ownership.

Into the black

Despite the drag of the car unit, the rest of Fiat is inching its way back to profitability.

The group as a whole made an operating profit of 22m euros in 2004, slightly better than analysts had forecast.

But Fiat Auto still faces hefty problems despite getting its fourth chief executive in as many years earlier this month when Fiat group boss Sergio Marchionne took direct control of the car business.

Mr Marchionne is betting on improving performance of the group's Alfa Romeo marque, as well as backing out of segments such as rental cars which are losing money.

Speculation has also suggested that the group could float its iconic Ferrari sportscar marque, but Fiat said there were no plans to do so.

New alliances

Another priority is to sign new alliances on specific projects in the wake of the breach with GM.

Mr Marchionne said he had no news on fresh tie-ups, but said he was looking for joint ventures in financial services.

Many carmakers' profits are now derived largely from their finance arms. Fiat sold half its financing unit in 2003.