Fiat CEO says plans unchanged, output rise possible

ROME - Fiat SpA Chief Executive Sergio Marchionne hinted that government targets of a boost in production to 900,000 vehicles a year in Italy were achievable, but said he still planned to end car output at a Sicily plant.

Marchionne, speaking after a first meeting with Industry Minister Claudio Scajola on Tuesday, said the figure was "not astronomical."

But he added that the company's plans for Italian factories, which evisage an end to car output at its Termini Imerese plant in Sicily by 2011, would not change.

Scajola said Italian car output "must be increased sharply," noting that France, Germany and Spain all produce more vehicles than their country's demand, while Italy produces just 30 percent of domestic sales.

Fiat does not give output details for its plants, but on Monday union leaders put the figure at about 600,000. Newspaper La Repubblica has implied current output is around 660,000 vehicles a year.

Fiat's plans may include shifting some production from the company's overstretched Poland plant to Italy, which could be as many as 270,000 Panda cars per year, which could be enough to meet Scajola's target.

Fiat, which now has a 20 percent stake in U.S. car maker Chrysler, first announced its plans for Italian plants in June and will now hammer out the details with the government ahead of presenting them to Prime Minister Silvio Berlusconi on December 21.

Like other European governments, Italy has supported car sales this year with tax breaks to buy smaller, less polluting cars -- a Fiat strength.

But the incentives are due to end on December 31 and although Marchionne has said it is up to the government to decide whether to continue them, he would like to see them end gradually rather than a sudden halt which could trigger sharp falls in sales.

Scajola said on Tuesday car sales were up 30 percent in November. Official figures are due to be published by the Transport Ministry at 1700 GMT.

A source in the sector told Reuters on Monday car sales in November were around 180,000, up about 30 percent from 138,352 units a year ago.

(Reporting by Alberto Sisto, writing by Jo Winterbottom, editing by Will Waterman)