Vienna - Canadian-Austrian car supplier Magna is set to lose its contract for assembling Chrysler cars, an industry source in Austria said Wednesday.

The source confirmed an announcement by Sergio Marchionne, the chief executive of Fiat, Chrysler's new Italian owner.

It was another setback for Magna, which also stands to lose contracts with Volkswagen because of the supplier's planned takeover of rival German carmaker Opel.

The source said Magna would continue making parts for Chrysler.

The Wall Street Journal quoted Marchionne as saying that after the acquisition of Chrysler, his company did not want to renew the assembly contract with Magna, but rather build the vehicles at an Italian plant.

Volkswagen and other manufacturers have threatened to cancel orders at Magna because of its Opel deal, but Fiat's decision has more to do with its attempt to gain full control over Chrysler's assembly operations, the newspaper said.

In the first half of this year, Magna built some 1,000 Chrysler 300C limousines and Jeep Grand Cherokee vehicles in Austria.

Neither Magna nor Fiat wanted to comment. (dpa)