Fiat is reportedly drafting a new strategic plan which could see up to 5,000 job losses in Italy and its number of models reduced.
According to the La Repubblica newspaper, the decision is likely to hit around 15% of Fiat's 30,000 assembly line workers.
This would include nearly 2,500 workers in Turin and 1,500 at a Sicilian unit that is likely to shut down next year, the report said.
The manufacturer is also planning to slash the number of its models from 12 to eight, but car production across Italy is to be increased by 50% to 900,000, the newspaper added.
Fiat, which is set to unveil the strategic plan for 2010-2014 on April 21, has not responded to the report.
But unions say job cuts on that scale, if confirmed, would be "worrisome and unacceptable".
Gianni Rinaldini, a union leader, called on the Italian government to discuss the issue with Fiat.
In June last year the car maker acquired a 20% stake in US-based Chrysler Group in exchange for small car technology and management leadership.
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