Fiat seen shrinking European plants

FRANKFURT (Reuters) - The proposal for General Motors' (GM.N) European assets that Italy's Fiat (FIA.MI) presented to the German government on Monday includes plans to shrink plants across Europe, a German newspaper reported.

These measures would affect both GM Europe's and Fiat's factories, Handelsblatt newspaper said, citing Fiat's proposal -- codenamed Project Phoenix -- which it said it obtained.

The 46-page proposal also includes plans to take over GM assets in South America and South Africa.

Fiat would shrink factories in the German cities of Ruesselsheim and Bochum, Spain's Zaragoza, Sweden's Trollhattan, and Antwerp in Belgium. German unit Opel would remain headquartered in Ruesselsheim.

In addition, Fiat could close Opel's factory in Kaiserslautern, a factory in Luton in Britain and one in Austria's Graz.

Among its own factories, it could shrink or close one factory in southern Italy and one in northern Italy. The factories in France, Poland, Greece and Serbia would be unaffected under the plan, Handelsblatt said.

Fiat, which has agreed to acquire a stake in Chrysler, has said it wants to merge its car unit with GM's European operations, which include Opel, sister brand Vauxhall, and Saab, to create the world's second-largest carmaker after Toyota (7203.T).

(Reporting by Maria Sheahan; Editing by Dan Lalor)