U.S. and European automakers better watch their rear-view mirrors as competition from Chinese rivals will result in a day of reckoning down the road, the head of Fiat SpA and Chrysler Group LLC said on Wednesday.

We cannot afford to be unprepared for the ascent of China, reassuring ourselves of our invincibility, Sergio Marchionne said at an industry conference here.

The excuse that we did not understand or that we underestimated the scale will serve no purpose, he added. Rather we need to continue to work to make our industrial base more competitive, because the day of reckoning is inevitably coming.

Marchionne was speaking at the Center for Automotive Research Management Briefing Seminars conference.

China is now the world's largest auto market and many automakers have partnerships there. Analysts have raised concerns that the transfer of intellectual property to Chinese companies could haunt automakers down the road by helping create stronger Chinese rivals that will export into the U.S. and European markets.

(Reporting by Deepa Seetharaman and Bernie Woodall, writing by Ben Klayman in Detroit, editing by Gerald E. McCormick)