Fiat, which owns 58.5 percent of Chrysler Group LLC, has stopped additional investments and postponed the introduction of new models in Europe.
Marchionne, who is also CEO of Chrysler, plans to eventually merge Fiat and the U.S. carmaker in a bid to increase sales to more than 100 billion euros by 2014 and reduce the Italian manufacturer's reliance on Europe.
Marchionne said that the new Grande Punto model, which was originally scheduled to be built beginning in 2013, "is one of the projects we are reconsidering in line with the changes" to the market in Europe.
Fiat is discussing partnerships "with several people, and in some cases our architectures, including the one for the Punto, are involved in the talks," he said. "We're definitely going to be at these lower sales levels for some time to come in Europe,"
Richard Hilgert, a Chicago-based analyst for Morningstar Equity Research, said by telephone. "It's going to be a long, slow recovery over there, and Marchionne's focusing more on growth outside of Europe."
Fiat is not considering an initial public offering of its Ferrari supercar maker to finance an acquisition of Chrysler, the CEO said. "We have enough cash."
Fiat may pay about 3 billion euros to buy the rest of Chrysler, Max Warburton, an analyst at Sanford Bernstein wrote in a note to clients May 21. "This is an excessive sum for me, have a look at General Motors Co. multiples," Marchionne said.
European carmaker CEOs meeting in Madrid haven't made any progress on a common plan to address the region's overcapacity issues, Marchionne said.
"I think my proposal will just remain a Marchionne idea," he said. "If there's no coordination by the European Union," every carmaker in Europe will "do it by itself," he said before a gala dinner with the other executives.