Fiat cannot match Chrysler margins, CEO says

Fiat SpA will not be able to reach an operating margin of 7-7.7 percent targeted by U.S. sister car maker Chrysler because Europe has not cut capacity, Chief Executive Sergio Marchionne told Automotive News magazine.

Marchionne, who also heads Chrysler, said in the interview published on Monday he expected the two carmakers to reach 5.5 million car sales a year "certainly before 2014," with half from Chrysler, in which Fiat currently has a 20 percent stake.

"I do think a decent business on the car side which is run efficiently can produce 7 to 7.7 percent in the United States. Is that number possible in the European market place ... The answer is no," he said in the interview, which was conducted on November 21. The full text is available at www.autonews.com

"In Europe, structural overcapacity has not been addressed ... The Obama administration ... has forced a restructuring on this industry where emerging companies, post-bankruptcy, are going to be much better suited to drive returns on capital," he said.

Marchionne confirmed A-segment city cars and their engines for the U.S. market would be produced in the North American Free Trade Agreement (NAFTA) area. Fiat expects to produce its Cinquecento city car in the United States by 2011.

Marchionne launched a detailed presentation of plans for Chrysler's brands -- Chrysler, Dodge, Ram and Jeep -- in Detroit on November 4 and has said he will make a presentation for Fiat in the first quarter of 2010.

The two companies will share architectures for some car production and Fiat has promised the U.S. government it will provide its technology for building smaller, less-polluting cars to Chrysler.

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