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Fiat Auto chief says 2003 profit goal tough to meet

MILAN, Nov 19 (Reuters) - Fiat Auto will struggle to meet its target of breaking even in terms of operating profit next year as sales remain depressed, the head of the core car-making unit of the Fiat group told an industry magazine.

"I would love to see Fiat Auto break even next year, but the general slowdown in the economy and declining car markets are making things more difficult for everyone," Giancarlo Boschetti told Automotive News in an interview published on Tuesday.

"What matters is that we have taken the right route," he said in the interview on the magazine's website.

A Fiat spokesman confirmed his comments.

The company has plunged into a financial crisis as demand for its cars in Italy dropped and sales elsewhere in Europe also fell. Fiat has forecast that it will make an operating loss of 1.2 billion euros ($1.22 billion) this year, roughly equal to its nine-month loss.

Boschetti told Automotive News that Fiat had been "a little too optimistic" when it made the breakeven forecast in May and said the company's net prices might fall more steeply than a 1.5-percent decline already expected next year.

"Only time will tell if this figure was right. Because of an unfavourable product-line changeover period, Fiat Auto will be affected more than competitors," the executive said.

Fiat has said it will lay off more than 8,000 workers, most of them on a temporary basis but with the possibility they may never return, sparking protests by trade unions. The government has also pressured Fiat to soften the blow of the restructuring.

"We have a moral responsibility to take them all back as soon as possible," Boschetti said in the interview when asked how many of the 8,000 workers might be rehired. "Partly, it will depend on the way the market develops and, right now, that doesn't seem particularly promising."

He noted that Fiat Auto planned to enter new market segments with several fresh products.

"We are predicting between 150,000 and 250,000 additional sales, which will mean taking back between 2,500 and 3,000 plant workers," Boschetti said.

He said Fiat aimed to take a 30-percent to 32-percent share of the Italian market in 2003 and 4.6 percent to 5.0 percent of the remaining European market for passenger cars.

According to data released last week by the European carmaker association ACEA, Fiat's share of the western European market, including Italy, fell to 8.2 percent in October from 9.5 percent in the same month a year earlier.

"But let me be extremely clear about market share. What counts is not only quantity, also quality. Our programme of revising our sales channels is clearly pointing to the quality of our market share," Boschetti said.