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UPDATE 1-Marchionne to update Fiat-Chrysler plan due to Europe woes

(Adds background on Chrysler-Fiat, details on Europe, quotesfrom CEO, byline)

By Bernie Woodall

COLUMBUS, Ohio, Oct 8 (Reuters) - Sergio Marchionne, chiefexecutive of both Fiat SpA and Chrysler Group LLC, willrevise 2-year growth plans for both automakers later this monthto reflect the slump in European auto sales since 2009.

European car sales fell 8.5 percent in August for an 11thstraight monthly decline and several auto executives said lastmonth that a European rebound was unlikely within two years.

That raised questions about Fiat's ability to meet targetslaid out in its five-year growth plan that was announced in2010. Marchionne outlined a separate five-year plan for Chryslerin late 2009.

Marchionne, who has led both automakers for more than threeyears, will outline his new 2013-2014 forecast for Fiat-Chrysleron Oct 30, he told reporters on Monday in Columbus, Ohio.

"You will see an update of what we think will happen in 2013and 2014," he said, before delivering a speech on creativeadvertising. "To assume that the 2010 data that was put out inEurope is going to be confirmed is nonsense."

Chrysler exited government-funded bankruptcy protection in2009 under the management control of Italian automaker Fiat,which was also given a 20 percent stake in the U.S. automaker.

Since its bankruptcy, Chrysler has become Fiat's main sourceof strength as auto demand in Europe contracts. The combinedFiat-Chrysler group now makes more than two-thirds of itsprofits in the United States.

"How the group overall compensates for that shortfall isanother issue because we've got other businesses and otheroperations that have come a long way," Marchionne said Mondayat the event held at the Wexner Center for the Arts at OhioState University.

VEBA, FIAT AT ODDS OVER CHRYSLER VALUE

Marchionne said he hoped to resolve quickly the disputebetween Fiat and Chrysler's other shareholder, the retireehealthcare trust affiliated with the United Auto Workers union,over the value of Chrysler.

"I would certainly hope that it would happen by the end ofthe year," Marchionne told reporters on Monday.

Since 2009, Fiat has boosted its stake in Chrysler from 20percent to 58.5 percent after meeting a series of performancetargets set by the U.S. Treasury during the recession.

Fiat would like to increase its stake in Chrysler by buyingshares now owned by the trust, known as the voluntary employeesbeneficiary association or VEBA. Fiat is seeking to exercise acall option to boost its stake in Chrysler by 3.3 percent.

But Fiat and the VEBA are now at odds over what those sharesare worth. The trust is looking to maximize the value of itsChrysler stake to cover escalating healthcare costs for the U.S.automaker's retirees.

Marchionne said Fiat will "show up" to exercise its calloption every six months, as allowed by the 2009 bankruptcydocuments. He will attempt to buy another small stake inChrysler from the VEBA in January.

(Reporting by Bernie Woodall; additional reporting by DeepaSeetharaman in Detroit; Editing by Gary Hill and Ken Wills)

((deepa.seetharaman@thomsonreuters.com)(313-416-4074))

Keywords: CHRYSLER FIAT/