Fiat chief Sergio Marchionne has predicted that the next big European car company merger will involve PSA Peugeot Citroen.

He told reporters that having failed to secure an alliance with Mitsubishi, he expected PSA “try with someone else.”

Peugeot, Europe’s second largest carmaker after Volkswagen Group, last month broke off talks on an equity swap with Mitsubishi. Meanwhile French rival Renault last week expanded its alliance with Nissan and AvtoVAZ to include Daimler.

Fiat itself took a 20% share in Chrysler last summer as part of a deal to help the US carmaker emerge from bankruptcy. Five months earlier, Marchionne said that many in the auto industry viewed a Fiat-Peugeot combination as a “marriage made in heaven”.

Fiat makes about 2m cars annually, while Chrysler manufactured 1.3m last year, a combined figure that still falls short of Marchionne’s contention that to survive as a global automaker, a company needs to produce at least 5m cars a year. Peugeot sold 3.2m vehicles in 2009.

Marchionne CEO reiterated that he expects Fiat to boost its stake in Chrysler to 35% within two years as it meets industrial targets laid out in an agreement. These include building a fuel-efficient engine in the US and expanding Chrysler’s sales outside North America.