Fears for British workers Fiat's plans for mega-merger with ailing car maker Vauxhall

Italian giant Fiat is poised to merge with Vauxhall as its parent company struggles in the credit crunch.

The new company would sell up to seven million cars a year, making it second only to Toyota in the global market.

Vauxhall employs more than 5,000 workers in the UK and there are fears their jobs may be at risk.

Fiat, which also owns Ferrari, is considering combining its car-making operations with GM’s European arm and its 20 per cent interest in manufacturer Chrysler.

This would create a car giant with around €80 billion (£71 billion) in annual revenues, the firm said.

Around 1,200 employees are based at Luton and 2,500 at Ellesmere Port with the rest at dealerships across the UK.

Vauxhall was originally founded in London in 1903. It has been wholly owned by the General Motors group since 1925 and responsible for around 20 per cent of its European revenues.