Something very important is going on. Europe knows it needs to do an Obama on its car industry, but the job is like herding cats.

Sergio Marchionne runs Fiat. He would like to also run Chrysler. He has run ACEA - the European car makers' bosses' club. He helps run UBS, the bank - one of the world's largest mergers and acquisitions specialists. He is a visionary, revolutionary and natural leader. He clearly sees it as his role to get those cats herded.

During the analysts' conference on first quarter financial results for Fiat, Marchionne was juggling three jobs. He occasionally made a genuine attempt to answer a question; he routinely lobbied for support for his cashless bid for control of Chrysler; and for good measure he stirred up a campaign for an industry-led reduction in car manufacture in Europe.

To get as close as possible to what he thinks, what he means and what he is actually hoping for, we have welded up sequentially the remarks that he made in answer to analysts' questions which shed light:

"When you stand back and look at the automotive landscape, you recognise that there is a structural imbalance between the capacity to produce and the demand.

This is something that we have recognised for some years. Some of you (analysts) have said that no factory in Germany has been closed since the war and whether or not that is true I do not know.

There are issues when you look at the industry on a global scale that require a realignment of this position in some fashion because without it this industry will not be able to attract capital to finance its future.

I know the pain that we have had to go through in the first quarter of this year to adjust operations to the new demand levels and it is a very painful process. The industry is incapable structurally of handling the problem; in the US the Government has had to step in to offer support to two of the largest players.

I do not want to defend that. I think that level of intervention to adjust is something that needs to be tackled. We are open to dialogue and we have opened dialogue with a number of companies. We are going to be part of the consolidation.

We are clear that we need to be part of a business with a minimum volume of 5-6 million vehicles. We need a million cars off each architecture.

If we cannot get there we are going to be sub-optimal and never able to afford the R&D required to drive this industry forward. We have a great opportunity now in a lot of ways to guide the industry (through). We do need to tackle (the overcapacity) once and for all. The rest is up to other people."

Q. Can you cherry pick Chrysler assets if it goes into receivership?

"I go back to what I said. I like Chrysler. It is too early to say whether the spoils will still be available if our deal does not go through."

Q. The plant closures in Europe. How sure are you we can do that?

"There are ways to deal with capacity issues. There are other ways than plant closures to get there including restricting the capacity of the plants to produce volume; (we) may have inefficiencies attached if (the plants) are not at optimal levels but it is minimal cost compared with the downside of creating the level of social instability associated with plant closure.

"We have to look at ways to naturally restrict (production) to try to achieve the same objective. What would two combining entities look like? We need to tackle this in a socially responsible way. But the solutions are there. Europe will not sustain ...to carry out a US downsizing. We would have to find a different approach to this. Tools do exist and methodologies exist to tackle a problem like this."

And on rumours of talks with General Motors Europe:

"I have seen all the press cutting on Opel. I have nothing to announce. There is nothing established. We are not having a direct conversation as far as I know. This is an industry issue not a shareholder issue. We have all recognised that there is a structural issue."

There are many conspiracy theories on what Marchionne is trying to do. The component industry thinks that the main event for him has become Europe since GME was put up for sale and that finalising the Chrysler bid is just a polite formality. The emphasis that Marchionne gave to Chrysler in his presentation though, suggests otherwise. The importance of GME seems to be not so much its availability but the fact that European rationalisation and collaboration is suddenly imminent and unavoidable and the elephant in the room.

The Fiat/Chrysler saga reaches the end of an important stage this week. The European search for an Obama plan alternative is going to be coming up close behind.

Rob Golding

- Goldie