Fiat-Chrysler merger forecast upsets Italy

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His comments on Friday in San Francisco were quoted by Italy's Corriere della Sera, prompting the mayor of Turin, Fiat's birthplace, to demand "immediate clarification."

"It's clear that an international group can have several offices but it would be different if the headquarters were in the United States," Sergio Chiamparino said.

A number of leading politicians also expressed indignation, and ANSA news agency said talks were planned next week between Marchionne and Economic Development Minister Paolo Romani.

"In the next two or three years we will be able to see a single entity. It could be based here in the United States," Corriere della Sera quoted Marchionne as saying.

"We'll have to integrate the companies first, though, and then look at the management," he added.

Faced with the outcry, the Labour Ministry on Saturday published a statement showing the Fiat chief backing away from his previous remarks in a telephone conversation with labour minister Maurizio Sacconi.

According to the ministry, Marchionne explained that he spoke in "hypothetical" terms and that nothing was decided, "with no reference about a new location for the company's leadership for today or tomorrow."

In October, Marchionne ignited controversy when he said that "Fiat would be better off if it eliminated Italy".

Trade unions and politicians accused him of "blackmail" in pushing through a tough deal on working conditions at Fiat's flagship Mirafiori plant in Turin to save the factory from closure.

Marchionne had given the workers the stark choice of losing their jobs or accepting more overtime, fewer breaks and shift work for up to 24 hours at a time, promising investment of one billion euros ($1.3 billion) in Mirafiori in return.

Fiat, an acronym for Fabbrica Italiana Automobili Torino, was founded in 1899 and has 188 factories around the world and a global workforce of 190,000.

It employs more than 80,000 people in Italy, making it the country's largest private sector employer, but Marchionne says Fiat workers in places like Poland are far more productive.

The company said last month that it returned to profit in 2010, beating analyst forecasts as it enjoyed strong sales of trucks and tractors, with Brazil performing especially well.

From January 1 it split into two companies -- its traditional car business based on its Fiat, Lancia, Alfa Romeo and Maserati brands, and Fiat Industrial formed from CNH, its agricultural and construction equipment unit and Iveco, the commercial trucks and buses branch.