UPDATE 1-Fiat chief sets production aim of 6 mln cars a year by 2018

Mon Mar 31, 2014 1:50pm EDT

* Capacity increase depends on Alfa Romeo, Maserati revamp

* CEO says doesn't need to sell assets to fund business plan

* Says to make announcement on Jeeps in China "within days"

* Shares close up 2.6 pct, hit more than six-year high (Recasts with production target, adds details, comments, writes through)

By Agnieszka Flak

TURIN, Italy, March 31 (Reuters) - Fiat Chrysler Automobiles (FCA) will be able to make more than 6 million cars a year by 2018 as its strategy focused on relaunching the Alfa Romeo and Maserati marques bears fruit, its chief executive said on Monday.

Speaking after a shareholders' meeting in Fiat's hometown Turin in northern Italy, Sergio Marchionne's comments underscore his upbeat view of the group's prospects following the full merger with U.S. partner Chrysler and reinforce a long-cherished production objective.

Marchionne has always said that a production capacity of at least 6 million cars a year was critical for an automaker's survival on the global stage, though the company does not give out past production figures. It shipped 4.4 million vehicles last year, a number which was hit by slack demand at home and in some other European markets.

Fiat - whose shares rose to a more than six-year high during the session - took full control of Chrysler in January in a $4.35 billion deal, creating the world's seventh-largest auto group and making it possible for the two to easily and cheaply share technology, cash and dealer networks.

"By 2018, Fiat will be capable of making more than six million vehicles (per year)," Marchionne told journalists.

FCA expects to export Maseratis and Alfa Romeos to override some of the weak demand in its traditional markets, hit by a six-year slump in car sales in Europe. A new plan outlining new models and investments will be presented in early May.

Marchionne said FCA may not need to sell assets to finance its expansion plan, but could fund it by issuing debt. "Technically, if I look at the structure today, I'd not sell assets," he said. "Raising capital with some type of instrument is still on the table.

"We have a lot of advice from Wall Street people that we don't have to sell assets or raise capital ... but we can run this by purely financing on debt." A convertible bond was one of the options the company has been considering so far.

ON THE ATTACK

Marchionne and Chairman John Elkann told shareholders to expect plenty of good news as the completion of the tie-up with Chrysler opens greater global opportunities for the carmaker.

"Today we are equipped to go on the attack against the giants in our industry," Marchionne said.

He also said the company was still in talks with Russia on a possible collaboration that could involve FCA setting up a plant there to produce Jeeps and light commercial vehicles.

"The talks with the Russian Federation and Sberbank are continuing," he said. "Russia continues to be a market of strategic relevance."

China remains one of the company's main weak points and Marchionne said FCA would make an announcement on production of Jeeps in China "within days". He did not give any details.

The CEO reiterated the group's forecast of a 2014 trading profit of between 3.6 billion euros ($5 billion) and 4.0 billion on revenue of around 93 billion. Worldwide group shipments are expected to rise to between 4.5 and 4.6 million vehicles this year, up from 4.4 million in 2013, he added.

Marchionne said the growth in shipments will be largely driven by higher volumes in North America and Asia-Pacific.

The new FCA - formal creation of which is still subject to a shareholder vote later this year - will have its primary listing in New York, with a secondary listing in Milan. The holding group will be registered in the Netherlands and have its tax domicile in Britain, cementing a politically sensitive shift away from Italy, Fiat's home for the last 115 years.

Marchionne expects to finalise the merger and the move of the primary listing this year. Unions and politicians have been concerned about any potential job cuts but Fiat said the merger would have no impact on jobs in Italy or elsewhere.

Fiat shares closed up 2.6 percent at 8.45 euros, compared with a 1 percent rise in Milan's blue-chip index, after hitting their highest level since late 2007.

($1 = 0.7271 Euros) (Additional reporting by Stefano Rebaudo; Editing by David Holmes)

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