Fiat SpA could bring on board a third partner before any initial public offering of its Chrysler unit as the group moves to reach its target of selling 6 million vehicles in 2014, Fiat CEO Sergio Marchionne said on Tuesday.

"It's possible to do an alliance before an IPO," Marchionne said on the sidelines of the Detroit auto show.

Marchionne, who has made Fiat one of Europe's top turnaround stories, told Reuters in December it was possible Chrysler would have an IPO in 2013.

The Fiat head, who is also CEO of Chrysler, had said on Monday he would be willing to be part of consolidation that would create another car company in Europe rivaling Volkswagen AG in size.

Some industry watchers have expressed doubts that Fiat will be able to meet its 2014 sales target at a time of economic slowdown and austerity.

But Marchionne said talk of a planned alliance with Peugeot SA as speculation, saying only that he had had dinner with the French group's CEO Philippe Varin in Detroit on Monday night.

At that meeting, the topic of an alliance was not discussed, he said, adding that a merger with Opel was also off the table.

Italian newspaper Il Corriere della Sera on Tuesday cited unnamed well-placed sources as saying Peugeot was ready to negotiate an alliance with the Fiat group.

Peugeot, Europe's second-biggest automaker after Volkswagen, declined to comment on the report.

An Italian analyst, who declined to be named, said an alliance with Peugeot would be positive and could help reduce costs, but would be a hard sell, as it would mean factory closures in both countries.

Fiat and Peugeot have ties dating back to the 1970s, with Peugeot plants in France having produced small vans and parts for the Italian group.

Shares in Fiat, which owns 58.5 percent of Chrysler, closed up 5.5 percent at 3.936 euros, outperforming the wider European car sector .SXAP, which was up 3.7 percent.

Peugeot shares jumped 5.6 percent to 12.92 euros.