Fiat Group SpA, controlling stakeholder in Chrysler LCC, on Monday reported a fourth-quarter loss due to a sharp decline in sales of trucks and construction equipment — even as sales of its small, fuel-efficient cars rose thanks to cash-for-clunkers incentives, reported The Associated Press.

The quarterly loss of €281 million ($397 million) compares with a net profit of €163 million in the same period a year earlier.

The company also reported a loss for the full year, but cut its net debt level more than anticipated and significantly strengthened its cash position.

It warned that its fortunes in the coming year would depend heavily on whether European governments continue scrapping incentives that have benefited makers of small cars.

Fiat CEO Sergio Marchionne also has run Chrysler since the U.S. automaker emerged from bankruptcy last June and Fiat took a 20-percent stake in exchange for its small-car and fuel-efficient engine technology and management know-how. Fiat's compact 500 model is expected to go on sale in the United States by the end of the year.

The alliance is intended to help both automakers achieve "critical mass," which Marchionne has put at between 5 million and 6 million vehicles a year. Last year, Fiat Group Automobiles produced 2.1 million vehicles, in line with a year earlier.