* Industry should brace for "multi-year payback" in Europe -CEO
* Some companies, investors scoping out deals in Europe
By Deepa Seetharaman
DETROIT, Feb 28 (Reuters) - The auto industry's turnaround efforts will take longer to gain traction in Europe than in the United States, where some companies were able to see the fruits of their plans within a year, Visteon Corp top executive said on Thursday.
The longer time frame partly stems from the fact that the severance pay required to lay off workers in some areas of Europe is higher than in the United States, Chief Executive Tim Leuliette said in an interview.
Furthermore, companies have struggled to keep pace with the sharp, rapid deterioration in the economy as austerity measures and unemployment have hurt consumer spending.
"Everyone's trying to pin a tail on the donkey, but the donkey does move," Leuliette said, after the auto parts maker reported fourth-quarter earnings Thursday.
Europe is Visteon's second-largest source of revenue. Last year, Visteon said it would make cuts in Europe and close plants around the world to cope with slowing demand.
Last month, new vehicle registrations in Europe fell to 918,280, the slowest January since its records began in 1990, the Association of European Automakers said.
"As Europe continues to contract, you have to always be cognizant of making sure you have the right assets and the right employment base in line with that reality," Leuliette said.
He added: "It typically is a multi-year payback to address restructuring in Europe."
SELLING INTERIORS UNIT A TOP PRIORITY
Visteon, former parts affiliate of Ford Motor Co, reported a fourth-quarter net income of $39 million or 74 cents a share, reversing a loss of $26 million or 51 cents per share a year earlier.
Leuliette, who has been Visteon CEO since September, is in the midst of revamping the company in response to concerns from investors and directors that its presence in too many businesses is hurting its market value.
One of Leuliette's top priorities in 2013 is to divest the company's interiors business. He declined to discuss the sale process, but said many companies and strategic investors are exploring potential deals in the auto parts business.
"There's a whole group of people who believe Europe is the U.S. of '09 and '10 and are buying assets now or looking at assets now because the price is right," he said.
"There are other people who see segments of the industry that still need consolidation," he added.
The U.S. auto industry came to the brink of collapse in 2009 when the economic recession pushed General Motors Co and Chrysler Group LLC to take federal bailouts to survive.
Since then, the sector has rebounded. On Friday, automakers are expected to report strong U.S. auto sales for the month of February.