In late July, the group had said Fiat Auto would likely break even at the operating level in 2006, rather than 2005.
The industrial conglomerate Fiat, Fiat Auto's parent, posted a sharp increase in third-quarter net loss owing to an exceptional item a year earlier, but slashed its operating loss by almost two-thirds.
Fiat's third quarter net loss came to €554 million (£385 million), compared to €84 million (£58.4 million) a year earlier.
Fiat's third quarter 2004 operating loss fell to €97 million (£67.5 million) from €283 million (£197 million).
Sales increased 9.4% to €10.648 billion (£7.4 billion).
The operating result was boosted in particular by Fiat's heavy truck (lorry) division Iveco and agricultural machine unit CNH, the group said.