'We are reducing the layoffs,' Fiat spokesman Gualberto Ranieri said Friday, though some factories will remain on temporary shutdown, including a plant in Naples.

Fiat is Italy's biggest employer, with some 80,000 workers, more than half of whom have been faced some period of temporary layoff, subsidized by a government-industry fund, since last fall.

The news seemed to reflect the positive impact of a government's incentive plan approved Feb. 10, calling for a payment of euro1,500 for trade-ins of polluting cars at least 10 years old, and even higher incentives for buyers of eco-friendly cars.

But the head of Italy's 600-strong dealership association, Dario Campagna, said while traffic to the nation's car dealerships is up even fivefold since January, few sales have been made, largely because of the credit crunch.

Meanwhile, the European Union on Friday expressed concern about the Italian incentives, saying they may violate competition rules.

In Sweden, the government was looking for ways to save jobs at Saab after the company went into bankruptcy protection. GM, which says it will seek to get the unit ready to sell, and Sweden have not agreed on additional funding to keep Saab viable on its own after the government rejected a bailout request from GM. Saab employs 4,500 workers in 50 countries.

'We explored and will continue to explore all available options for funding and or selling Saab and it was determined a formal restructuring would be the best way to create a truly independent entity that is ready for investment,' Saab's managing director, Jan Ake Jonsson, said in a statement.

GM's unit in Germany, Adam Opel GmbH, also is in trouble, and a union official who sits on the supervisory board said it needs some euro3.3 billion ($4.2 billion) -- twice as much as previously discussed -- to weather the economic crisis.

Armin Schild, a senior member of the IG Metall union, told the Associated Press that the sum would allow Adam Opel GmbH reduce its reliance on troubled U.S. parent GM.

In Britain, auto industry officials launched calls to increase government help as new figures showed new car production fell 58 percent in January from a year ago.

Several car manufacturers, including BMW, Nissan and Honda, have already shed jobs and reduced workers' hours in response to slowing consumer demand and there are fears the industry might never recover.

The British government has promised a series of measures worth up to 2.3 billion pounds ($3.2 billion) -- which the industry says is insufficient compared to the U.S. rescue plan and euro7.5 billion in low-interest loans from the French government

'The extent of the decline highlights the critical need for further government action to deliver the measures already announced and ease access to finance and credit,' said Paul Everitt, the chief executive of the Society of Motor Manufacturers and Traders.