Chrysler will build Alfa Romeos in North America for European markets, resulting in 5000 job cuts in Italy, according to a report.
Automotive News Europe is reporting that the move will affect jobs in three Italian plants and around a quarter of the firm's workforce there.
The Chrysler plant where the Alfas will be built has not been named, but it will be in North America and build cars for that market and Europe. It is expected it will build the 159 replacing Giulia saloon and estate, a new large crossover and a rear-drive Alfa 166 replacement.
It has previously been confirmed that Chrysler will build Chrysler and Dodge vehicles to be sold in Europe as rebadged Fiats and Lancias in plants in the US, Canada and Mexico.
In addition, the 300C saloon, Sebring saloon and cabrio and Voyager minivan will be rebadged as Lancias and sold in Italy from 2011. They will also be sold as Chryslers outside Italy.
The Dodge Nitro will be rebadged and sold in Europe by this year, and the Journey crossover will bgo on sale in Europe in spring 2011.
The move is part of a rationalisation of Fiat's operations in Italy; its five plants currently built 14 different Alfa, Fiat and Lancia models, but that will decrease to nine models in 2012.
In addition, Fiat has already said it will close its facility at Termini Imerese, Sicily at the end of 2011, at the cost of 1400 jobs.
Fiat said in a statement that media speculation about its future product plans was "premature and groundless."