Fiat SpA reportedly is in talks with Chrysler LLC on a partnership that could give Chrysler access to Fiat’s small-car technology.In return, Fiat, which has been interested in returning to the U.S. market, would have access to Chrysler’s plants and dealer network, according to Automotive News and the Wall Street Journal, both of which cite unnamed sources. Chrysler declined to comment on the matter. 

“Chrysler LLC as a matter of policy … does not confirm or disclose the nature of its private business meetings,” the company said in a statement. “Beyond those partnerships and alliances already announced, Chrysler has no further announcements to make at this time.”

Industry observers said the move could quickly give Chrysler a small-car lineup at a time when its domestic competitors already have announced plans to introduce new small-car models.

Through a partnership with Fiat, Chrysler could jump into the small-car market, “without significant capital investment,” said restructuring expert Van Conway, of turnaround firm Conway, MacKenzie and Dunleavy. That’s crucial for Chrysler, which is operating on a $4 billion loan from the U.S. Treasury, and is seeking another $3 billion in federal loans.

A deal also could give Fiat an equity stake in Chrysler. Cerberus Capital Management LP, Chrysler’s majority owner, has indicated that it is willing to give up its stake in Chrysler. Cerberus last month said it would be willing to give up its equity in Chrysler in exchange for concessions from stakeholders, including unions and bondholders.