June 16, 2017 / 11:15 AM / 2 months ago

Fiat Chrysler CEO says 2018 targets unaffected by diesel troubles

FILE PHOTO: Fiat Chrysler CEO Sergio Marchionne answers questions from the media during the FCA Investors Day at the Chrysler World Headquarters in Auburn Hills, Michigan, U.S., on May 6, 2014.Rebecca Cook/File Photo

VENICE, Italy (Reuters) - Fiat Chrysler Automobiles (FCA) (FCHA.MI) does not expect its diesel problems in the United States to have an impact on its short-term business targets to 2018, Chief Executive Sergio Marchionne said on Friday.

The U.S. Justice Department sued FCA last month, accusing the Italian-American automaker of illegally using software to bypass emission controls in 104,000 diesel vehicles sold since 2014, in a move that could potentially lead to heavy fines.

The company has proposed a software update as part of certifying 2017 diesel models to allow them to go on sale and then use that fix to update the 104,000 vehicles on the road.

Asked whether it could take months to get U.S. authority approval for the software fix, as suggested by a U.S. Justice Department lawyer this week, Marchionne said "we are much closer than this".

"When we made the proposal, we were ready to implement the fix immediately ... now it depends on them," Marchionne told journalists on the sidelines of a meeting in Venice of the U.S.-Italy council. "We are talking to them ... we think we have a viable solution."

He said the company had not made any provisions for any potential fines, adding it was "impossible to try estimate".

Part of the 2018 business plan, which is centred around the revamp of its Jeep, Maserati and Alfa Romeo brands, is erasing all debt and accumulating at least 4 billion euros ($4.5 billion) of cash by the end of next year.

After failing to strike a much sought alliance for FCA, Marchionne has made executing the 2018 plan his core ambition before he steps down at the end of his tenure early in the following year.

When asked whether he could rethink his decision to quit in early 2019 given political and market uncertainties surrounding his company, Marchionne, who turns 65 on Saturday, said "No."

He said there was a "wide and deep bench" of possible internal candidates to succeed him, and did not exclude the possibility of his powers being divided among several managers, although added this would be up to the board to decide.

"My job is not easy, it's a bit loaded," he said.

Marchionne said the second quarter was going in line with expectations and confirmed the targets for the full year.

Widely credited with reviving one of Italy's top corporate names and rescuing U.S. Chrysler from bankruptcy, Marchionne has seen pressure mounting in recent months, with the U.S. market at its peak and legal challenges launched in the United States and in Europe over the company's emissions credentials.

His ambition to tie up with General Motors (GM.N) to share the costs of making cleaner and more autonomous vehicles has been repeatedly rebuffed. While Marchionne briefly flirted with the idea of a tie-up with Volkswagen (VOWG_p.DE), he reiterated on Friday that there were no talks with anyone at present.

He stressed, however, that a merger for FCA was "ultimately inevitable" to be able to compete, although it might not happen during his tenure.

"The only way you’re going to get that is by mass, there is no other solution," he said. "Being small, cute is going to do nothing. Go home, go to a beauty parlour and do something else."

Asked whether FCA felt the same investor pressure that led to the sacking of his counterpart at U.S. rival Ford (F.N) or that which prompted GM to leave Europe, Marchionne said the 2018 plan would be his judge.

"As long as we deliver on those commitments, you will not get pressured ... people will love you," he said. "What they do to you in 2019 is a different story."

Reporting by Agnieszka Flak; Editing by Keith Weir and Jane Merriman

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