Fiat seeks China partners as Euro sales sag

NEW DELHI (Reuters) - Vehicle maker Fiat (FIA.MI) is in talks with a number of potential partners in China as it seeks to offset sluggish sales in Italy and the rest of Europe, its chief executive said on Thursday.

"For Italy, 2008 will be a painful year, 2009 will be better ... the rest of Europe won't see a stellar performance in 2008," Sergio Marchionne said on the sidelines of an automotive industry conference in the Indian capital.

"We are handling the weakness in Europe with strong performance in the BRIC economies," he said, adding the company was sticking to its earlier earnings' forecasts for 2008 and 2009.

Fiat is talking to a number of potential partners in China and may have to push the timing of its target of 300,000 units in China beyond 2010, he said.

"We have had a number of issues, we have to firm up other partners," said Marchionne, who is credited with steering a turnaround behind the Alfa Romeo, Lancia and Fiat brands.

He has said Fiat is looking for a partner for its return to the North American market.

In India, Fiat has a joint venture with top vehicle maker Tata Motors (TAMO.BO) to produce cars.

It agreed in July to handle the financing in Europe for Tata's Jaguar and Land Rover brands, while Tata said it was open to Fiat selling the Nano, billed the world's cheapest car with a price just above $2,500.

In India, it has relaunched its Palio model under the joint venture and plans to produce two more models to grab a larger part of the market.

INDIA SALES

Car sales in India have showed signs of strain in 2008 as high interest rates designed to turn around rising inflation, which in mid-August was just below an annual 12.5 percent, trimmed consumer spending.

Slackening sales have snapped several years of strong growth, which were spurred by rising incomes and changing lifestyles.

However, automakers hope demand will pick up during a series of annual festivals from mid-September, and, along with new models, lift sales.

Maruti Suzuki Ltd (MRTI.BO), India's top car maker, plans to launch its A-star model in October, and offer discounts and freebies across its models to boost festival sales.

The Indian unit of Hyndai Motor (005380.KS) said at the same industry meet on Thursday it expects exports to help it offset a domestic slowdown and meet its annual target of 530,000 units.

Honda Motor Co's(7267.T) Indian unit, which sells mid-to-premium cars and utility vehicles, expects stagnant sales to pick up from September.

(Reporting by Rina Chandran and Devidutta Tripathy; Editing by Mark Williams)