Europe needs auto industry consolidation: Fiat CEO

DETROIT Mon Jan 9, 2012 12:08pm EST

Fiat-Chrysler CEO Sergio Marchionne speaks with the media at the North American Interantional Auto Show on the first press preview day in Detroit, Michigan, January 9, 2012. REUTERS/Rebecca Cook

Fiat-Chrysler CEO Sergio Marchionne speaks with the media at the North American Interantional Auto Show on the first press preview day in Detroit, Michigan, January 9, 2012.

Credit: Reuters/Rebecca Cook

DETROIT (Reuters) - Europe needs auto industry consolidation to reverse poor operating conditions and uncertainty in a market burdened by overcapacity and little or no sales growth potential this year, the chief executive of Fiat SpA said on Monday.

Speaking with reporters on the sidelines of the Detroit auto show, Sergio Marchionne said he would be willing, in principle, to be part of a consolidation that would create another car company in Europe rivaling Volkswagen AG in size.

"If you take two of the European players and put them together, you're going to get the right answer," Marchionne said.

"You've got Volkswagen that is doing roughly 20 percent of the market share in Europe. I think you need to create another Volkswagen in terms of reach. How that happens -- it's a Rubik's cube."

Marchionne, whose company runs Chrysler Group LLC, said he sees no improvement in European sales industrywide in 2012. Separately, Carlos Ghosn, CEO of Renault SA and its Nissan Motor Co Ltd affiliate, told Reuters Insider in Detroit on Monday that he estimates a 3 percent decline overall for automakers in Europe this year.

Marchionne said separately that Chrysler remains in talks with the Obama administration over a possible Energy Department loan to help it make more fuel efficient cars and trucks in the United States.

"It has been somewhat frustrating. I would expect a decision to be close. We have done everything that the DOE has asked for. There are issues that need to be resolved within DOE in terms of credit policy and so on," he said.

Marchionne said Chrysler would not receive the $3.5 billion it originally sought, but he did not say what figure the company could expect to get now.

The loan program previously extended credit financing to Ford Motor Co and Nissan but has since come under congressional scrutiny along with other Energy Department loan programs.

Marchionne said if government conditions became too onerous, pursuing the loan might not be worthwhile for Chrysler. General Motors Co had applied for similar funding but withdrew its bid after determining it could finance its own factory upgrades.

(Reporting By Deepa Seetharaman and John Crawley; Editing by Gerald E. McCormick)

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