General Motors moved closer to selling a majority stake in Opel, while the deadline for Chrysler to find a partner entered its final days, and Japan's Toyota kept its top global ranking even after reporting a 27 percent drop in sales.

Separately, No. 1 U.S. automotive dealership AutoNation posted results that beat Wall Street's estimates but said its quarterly profit fell nearly 32 percent on continued weak U.S. demand for vehicles.

Auto parts maker Robert Bosch, the world's biggest car parts supplier by sales, also said it would slash jobs this year in Germany and abroad, and rival Continental AG prepared to tighten its belt.

GM faces a June 1 deadline from the Obama administration to restructure its operations or face bankruptcy. GM needs to sell a big stake in Opel to get $4.3 billion in loan guarantees from the German government to rescue its troubled unit.

Italy's Fiat SpA , which reported a first-quarter loss, reiterated its desire to complete an alliance with Chrysler LLC, majority owned by Cerberus Capital Management , and emerged with other parties as a potential buyer for Opel.

Armin Schild, who represents labor union IG Metall on the Opel supervisory board, told Reuters that Fiat was in talks with GM to buy a controlling interest in Opel.

Earlier on Thursday, German magazine Spiegel Online had said that Fiat would sign a letter of intent next Tuesday, citing people close to the negotiations.

Fiat Chief Executive Sergio Marchionne said there had not been direct talks with Opel and there was nothing to announce regarding a deal.

INTERESTED PARTIES

A spokesman for Opel reiterated that the company was in talks with several interested parties, declining to identify them. Schild said IG Metall strictly opposed such a deal.

Two sources close to the situation told Reuters that Fiat and Canadian automotive supplier Magna Steyr were both interested in taking a stake in Opel unit but a deal was not imminent. Magna declined to comment.

In its statement on quarterly results, Fiat said it would keep pursuing its strategy of targeted alliances while conducting talks with Chrysler.

If Fiat fails to clinch a deal with Chrysler, some analysts have said it could turn to GM to gain the scale it needs to survive the worst industry crisis in decades.

But it remains to be seen how it would finance such a deal because Fiat already faces doubts about its ability to pay off debt due this year.

GM Chief Executive Fritz Henderson has said the car maker had reached out to more than six potential buyers, many of whom were financial investors.

But private equity firms are giving Opel the cold shoulder, leaving sovereign wealth funds from the Gulf or Asia as the most interested private investors, managers at buyout firms have told Reuters.

TIME TICKING DOWN

The U.S. government deadline for Chrysler to reach an alliance deal with Fiat entered its final week on Thursday with talks intensifying.

Late Wednesday, sources with direct knowledge of the discussions said the U.S. Treasury had offered Chrysler lenders $1.5 billion of first-lien debt and a 5 percent equity stake in a restructured company in exchange for about $7 billion of debt they now hold.

The Chrysler lending group had sought $4.5 billion of first-lien debt and a 40 percent stake in the restructured automaker, sources have said.

Most analysts expect the Chrysler-Fiat talks to go right down to the deadline. A Fiat spokesman said that the talks were completely open and the automaker had no timetable for reaching an agreement.

U.S. dealers planned to meet later on Thursday with the Obama administration's autos task force to review GM and Chrysler restructuring.

Political allies of the two companies met with senior White House officials on Wednesday where the two groups exchanged views on bankruptcy and Chrysler's chances for an alliance, according to a statement from Democratic lawmakers who attended.

In Toronto on Thursday, the Canadian Auto Workers said it was too soon to know if it will reach a last-minute cost savings deal with Chrysler, but it was pushing hard to get it done.

In Japan, Toyota Motor Corp <7203.T> said its group-wide sales fell 27 percent to 1.7 million vehicles in the first quarter of 2009, but the number still kept it ahead of Volkswagen AG as the world's top-selling carmaker.

The gap in group-wide sales between Toyota and Volkswagen shrank to 363,000 vehicles in the January-March quarter from 840,000 a year earlier.

Volkswagen AG Chief Executive Martin Winterkorn, meanwhile, hailed cooperation with majority owner Porsche

and reiterated he expected a group profit in 2009 despite a car market slump.

Hyundai Motor Co <005380.KS>, South Korea's top automaker, reported a smaller-than-expected 43 percent fall in quarterly net profit as a weak won cushioned it from higher marketing costs and drop in sales.

(Additional reporting by Gilles Castonguay in Milan, Madeline Chambers in Berlin, Angelika Gruber in Frankfurt, Christian Gutlederer in Vienna, Jan Schwartz in Hamburg, Chang-Ran Kim in Tokyo, Cheon Jong-woo in Seoul and Jui Chakravorty Das in New York; Editing by Patrick Fitzgibbons and Brian Moss)

Chrysler Deals