Fiat has announced a major restructuring plan involving 6,000 job losses outside of Italy, production cutbacks at 18 plants and the departure of Roberto Testore, Fiat Auto chief executive since 1996.

Mr Testore will be replaced at the year end by Giancarlo Boschetti, currently chief executive of Iveco, Fiat's commercial vehicles group. His replacement is Michel de Lambert.

Fiat is facing debts of 7.5 billion euro (£4.7 billion)at the end of the third quarter and is expected to post a 12-month deficit of 230m euro (£143m).

Of the 18 plants earmarked for cutbacks or closure, Fiat said that 10 had already been planned. But there could be additional closures in Europe, North America and Argentina.

The carmaking business will also be re-organised into four 'business units': Fiat/Lancia, Alfa Romeo, international development and services with each responsible for its economic and financial performance and featuring separate product development, marketing and commercial organisations.

The decision has been taken as a result of the global economic 'crisis', which Fiat says has led to a "significant reduction in sales volumes".

On the reorganisation of Fiat Auto, a company spokesman said: "A primary focus of this new organisational structure will be to enhance the value of Fiat Auto's portfolio of brand names. The Fiat brand will continue to be aimed at the general public and known for its highly innovative products. Lancia will strengthen its position as an elite and exclusive brand, through the launch of new models such as the Thesis which from spring 2002 will be the flagship of Fiat Auto.

"The Alfa Romeo brand will be reintroduced to the North American market and will benefit from significant investments intended to consolidate its place in the top tier of stylish sports car brands."

Fiat says the restructuring would not affect its alliance with General Motors, which owns 20% of the Fiat Auto division.