UPDATE 1-Fiat-Chrysler CEO says confident automaker will succeed

* Fiat-Chrysler CEO says "no doubt" automaker will succeed

* Says new company has healthy balance sheet

* Says Fiat will begin transferring technology

DETROIT, June 10 (Reuters) - Fiat-Chrysler (FIA.MI) Chief Executive Sergio Marchionne said Chrysler has many challenges to overcome but has "no doubt" that the automaker will succeed.

"Chrysler is now a more focused and nimble company that will benefit greatly from its new global strategic alliance with Fiat," Marchionne said in a introductory message to employees.

"The new company moves forward with significant strategic advantages, including a healthy balance sheet, a competitive cost structure, a leaner and more efficient dealer network," he added.

A Fiat-led group purchased Chrysler's strongest assets from bankruptcy on Wednesday, reviving the 84-year-old U.S. automaker that was down to its last dollars and facing liquidation late last year.

Chrysler had been operating in bankruptcy with the backing and financing of the U.S. Treasury since April 30.

Marchionne became CEO of the new company, known as Chrysler Group LLC, which is 20 percent owned by the Italian automaker and 55 percent owned by a union retiree healthcare trust fund.

By combining Chrysler with Fiat's car business, Marchionne has created a group that would rival Volkswagen AG (VOWG.DE) in size. And size is important for the 56-year-old Italian-Canadian executive, who has argued that no car maker could survive the crisis without making more than 5 million cars a year.

"The alliance is a bold first step to implement those lessons we've learned, but it is only a first step," he said in the new memo. "Now we must prove we can make it work."

Marchionne is no stranger to turnarounds. He led Fiat to profits after he took over as the top executive there in 2004. But the brutal plunge in vehicle sales globally has Fiat back burning cash, juggling a huge debt and running a loss.

With the move, Fiat aims to survive and grow out of one of the worst crises in global auto industry.

Combined, Chrysler and Fiat ranks as the world's sixth largest automaker, giving the two companies the scale to compete with other large player like Toyota Motor Corp(7203.T).

But Marchionne said while scale is critical, events have proven that "only size managed well will be effective."

Over the next few months, Fiat will begin the process of transferring technology to Chrysler.

A growing team of Fiat executives and engineers has been working at Chrysler's Detroit-area headquarters last week, finalizing plans to cut costs and ready the Fiat 500 small car for the U.S. market, source have told Reuters.

"Chrysler, Jeep and Dodge vehicles will once again roll out of our plants, into our dealers' showrooms, and soon thereafter onto America's roads and highways," Marchionne said in the message. "We have much to look forward to."

(Reporting by Poornima Gupta)