Sergio Marchionne, the chief executive of Chrysler Group LLC and Fiat SpA, is guardedly optimistic the European Union will take steps this week to help the euro regain its credibility.
Without detailing what those steps might be, Marchionne said there was a better than 50 percent chance the EU will push through changes that will help shore up the currency.
In the next 30 to 60 days, we should see the euro reacquiring credibility, reacquiring, certainly, support in the international financial markets to move forward, Marchionne told Reuters Insider on Tuesday.
This week is crucial for the health of the euro zone, with French and German leaders charged with pushing budget changes that will restore market confidence and prevent the sovereign debt crisis from escalating further.
Marchionne, who described the introduction of the euro as premature, said the euro zone currently lacked adequate power to enforce sound fiscal policies in each member country.
Italy, where Fiat has five money-losing plants, has become the eye of the storm, but Marchionne said austerity measures introduced by Italy's new emergency government led by Prime Minister Mario Monti have diminished the uncertainty around Italy.
Still, Fiat is waiting for more clarity on Europe's financial condition before resuming the regular pace of its expansion and vehicle investment plans in Europe. Fiat has 22,000 employees in Italy who produce 650,000 cars a year.
These uncertainties have slowed down some of the processes that Fiat normally would have executed much faster for investments and for expansion activities in the euro zone, Marchionne said.
CHRYSLER TO THE RESCUE
To compensate for the weakness in the European economy, the Italian automaker has relied on Chrysler to bolster profits, a total reversal of expectations from two years earlier.
Chrysler emerged from bankruptcy protection in June 2009 under the management control of Fiat and with more than $7 billion in loans owed to the U.S. and Canadian governments.
In the runup to Chrysler's federal bailout, Treasury officials debated whether the company should even be saved. The U.S. automaker had three different owners in as many years while its vehicle lineup was starved of investment.
When the Fiat deal was announced, analysts believed Chrysler would be a millstone around Fiat's neck.
Now, a little more than two years after its bankruptcy, Chrysler is carrying Fiat. The U.S. automaker made up two-thirds of Fiat's third-quarter profit and has repaid its government loans through a refinancing.
Chrysler sales in the United States have surged about 25 percent this year, outpacing the 10.4 percent rise in the overall market.
But Chrysler, too, has had its missteps this year. Its Fiat 500 small car has sold less than 18,000 vehicles this year, falling woefully short of Chrysler's 50,000 sales target.
To be perfectly blunt, the launch was poorly executed because we had a car way earlier than distribution was available, Marchionne said.
We launched too early, he said. For all intents and purposes, it would have been a better launch in January 2012 than in January 2011.
2013 A 'BIG YEAR' FOR FIAT-CHRYSLER
Marchionne said he was confident the Fiat 500 could hit its sales targets in 2012. The small car represents the beginning of Fiat's rebirth in the United States market, which the brand left in 1983 with a poor reputation for quality that prompted the nickname Fix It Again, Tony.
Chrysler plans to bring the Alfa Romeo brand back to the U.S. market in 2013. Marchionne said there is a good chance Chrysler will revive the Jeep Grand Wagoneer as well.
The big year for us, for a variety of reasons, is 2013, Marchionne said. The most substantial portion of the product portfolio renewal will happen in 2013.
(Reporting by Deepa Seetharaman and Paul Ingrassia in New York, editing by Matthew Lewis)