DETROIT (AP) — Fiat CEO Sergio Marchionne said Wednesday that Europe needs to cut 10 to 20 percent of its auto manufacturing capacity to deal with falling sales in the region.

Pricewaterhouse Coopers estimates Europe sold 13.5 million vehicles last year, down from a peak of 16 million in 2007. Marchionne said he thinks sales will stay at that depressed level through at least 2014, unless Europe's governments solve the region's debt crisis.

"We're going to have a car industry that will lope along until something's done," he said at the Automotive News World Congress, an industry conference. He didn't detail specific cuts for Fiat.

Europe has around 200 auto plants that employ 2.3 million people, according to a European auto trade group.

European leaders have a great opportunity to transform the region, but must act quickly, Marchionne said.

"The focus on narrow national interests creates the serious risk of destroying the dream of unity and solidity upon which the European Union was founded," he said.

Marchionne is also the head of Fiat's partner Chrysler Group. He cautioned that 2012 sales in the U.S. won't increase at the astronomical pace that 2011 ones did. Popular new products like the Chrysler 200 sedan and Jeep Grand Cherokee and an acclaimed Super Bowl ad featuring rapper Eminem helped boost Chrysler's sales by 26 percent last year.

"This string, we know, cannot be duplicated," he said.

But he said he does expect Chrysler's share of the U.S. market to increase thanks to new products like the Dodge Dart, which was unveiled this week at the Detroit auto show. Chrysler's share of new-car sales rose to 10.6 percent in 2011 from 9.4 percent the year before, the biggest jump in the industry.