London analysts are sceptical about this week's £1.5bn cross-shareholding alliance between General Motors and Fiat Auto, believing the two will be forced into a full merger, or that the Italian group could pull out of the car market.

GM has taken an initial 20% stake in Fiat Auto and John Lawson, analyst at Salomon Smith Barney in London, said: “Fiat has extracted quite a good price. It looks like the group might be staging a gradual withdrawal from the car business.”

The GM and Fiat team-up is a response to the 1998 merger of Chrysler Corporation and Daimler Benz but each wants to retain its own identify.