Fiat has posted a profit of €293m (£200m) for the first quarter of this year, compared to €390m (£266.7m) in 2004, thanks to a £531m payment from parent company General Motors.

Sales in the first three months of 2005 dipped 2.4% to €10.8bn (£7.4bn).

Without the GM payment, the Fiat Group - which makes industrial and agricultural machinery as well as cars - would have posted a net loss of €245m (£167.6m).

The cash is the first instalment of a $2bn (£1.06bn) agreement between GM and Fiat, which allowed the US carmaker to buy its way out of a joint venture.

In February, Fiat agreed - in return for the money - to annul a "put" option that gave it the right to sell its unprofitable vehicle business to the US company.

Fiat's car unit, which produces vehicles under the Fiat, Lancia and Alfa Romeo brands, saw sales drop 9.3% to €4.62bn (£3.16bn) in the first quarter. It narrowed its losses to €129m (£88.2m) from €146m (£100m) a year earlier.