UPDATE 1-Fiat CEO sees mergers among car makers - report

MILAN, Dec 6 (Reuters) - Global car makers will be forced to merge to survive the onslaught of the global crisis, leaving their industry with only six big players, Fiat's chief executive was quoted as saying in a report on Saturday.

'The only way for companies to survive is if they make more than 5.5 million cars per year,' Sergio Marchionne told the European edition of Automotive News, an industry publication.

'As far as mass-producers are concerned, we're going to end up with one American house, one German of size; one French-Japanese, maybe with an extension in the U.S.; one in Japan; one in China and one other potential European player.'

Although Marchionne did not name the companies, those whose production levels reach that number include Toyota Motor Corp , General Motors, Volkswagen, Ford Motor and Renault-Nissan.

Fiat is much smaller. In the first nine months of the year, its deliveries of cars and light commercial vehicles were in excess of 1.7 million units.

Marchionne's comments came at the end of a week when the

chairman of Fiat's main shareholder said he would be open to a partnership or merger.

'There are no proposals being studied but what is certain is that if opportunities present themselves and make sense industrially Fiat will not sit by and watch,' John Elkann was quoted by Italian daily La Repubblica as saying.

The market has been speculating about a sale of the car business of the Fiat industrial group for years because it sees it as not being big nor profitable enough to remain independent.

Expectations of a consolidation were heightened this week after Ford and General Motors put up their Swedish units Volvo and Saab for sale. Buyers are seen to be few and far between in these uncertain times.

Marchionne saw mergers occurring in the next two years.

'This business is going to be completely different,' he said. 'It cannot continue as it did in the past. Independence in this business is no longer sustainable.'

Marchionne's comments were in an extract of a story to come out in the publication's latest issue next week. The extract was part of an email obtained by Reuters highlighting the major stories of the coming issue.

Car makers are cutting production and laying off workers after new cars sales have plunged in the world's major markets.

The crisis has made credit more expensive for consumers and scared them from making big purchases, given the prospect of lay-offs as economies slump into recession.

It has also forced car makers to seek government help.



PUTTING ON THE BRAKES

At Fiat, Marchionne said he was suspending future projects.

'I'm putting the brakes on everything. I'm putting the brakes on model development that has not already gone beyond 80 percent or 90 percent,' he said.

'The Alfa 147 (replacement) is coming out, that won't change,' he said, referring to the 149, scheduled to come out under the Alfa Romeo sports brand in the fourth quarter of 2009.

'But if you ask me if I will invest in a new SUV for Alfa on my own, the answer is: 'No!'

'The Wal-Marts of the automotive world, the mass-producers, which is what we are, have to find and agree that there is a new business model required to run our shops,' he added.

(Reporting by Gilles Castonguay; Editing by Ron Askew) Keywords: AUTOS/MERGERS ([e-mail]; [phone]; Reuters Messaging: [e-mail]) COPYRIGHT Copyright Thomson Reuters 2008. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.