Fiat has reduced net losses in the first quarter following its restructuring programme. Total net losses for the group fell to €194m (£130m) from €681m (£457).

Sales reached €11.2bn (£7.5bn) during the quarter compared with €12.3bn (£8.25bn) in 2003, while its operating loss narrowed to €158m (£106m) from €342m (£229m).

The group says it is now confident that it will break even by the end of the year.

The results have primarily been put down to demand for the company's new products and to the impact of cost-cutting programmes implemented under Fiat's re-launch plan.

The Italian carmaker has set out to improve its product line during the first three months of 2004, including the launch of the compact MPV Lancia Musa, the Alfa Crosswagon (which marks Alfa Romeo's return to the all-wheel-drive market segment), a totally restyled Multipla, and the introduction of the Panda 4x4.

Fiat Auto's share of the automobile market held steady at 8.1% in Europe during the quarter and improved by 1.2% points in Italy, from 28.2% to 29.4%.