UPDATE 1-Fiat Chrysler CEO says 2018 targets unaffected by diesel woes

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VENICE, Italy, June 16 (Reuters) - Fiat Chrysler Automobiles (FCA) does not expect its diesel problems in the United States to have an impact on its short-term business targets, the carmaker's 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. We are still in talks," Marchionne told journalists on the sidelines of a meeting in Venice of the U.S.-Italy council.

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 Fiat Chrysler, 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."

Marchionne added that 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 its emissions credentials.

His ambition to tie up with General Motors to share the costs of making cleaner and more autonomous vehicles has been repeatedly rebuffed. While Marchionne briefly flirted with the idea of tie-up with Volkswagen, he recently said his focus was solely on executing the business plan. ($1 = 0.8961 euros) (Reporting by Agnieszka Flak; Editing by Keith Weir)