By Jennifer Clark and Alberto Sisto
ROME, Dec 12 (Reuters) - The continuing slump in Italy's car sales "can and must be reversed", Prime Minister Mario Monti insisted on Wednesday, without offering hope of any possible government support.
While the French government has stepped in to help ailing Peugeot, Italy has taken a hands-off approach as its auto industry has endured Europe's five-year sales decline against a backdrop of the euro zone debt crisis and state austerity measures.
"Italian industry in particular has suffered for some time in this situation in which the car sector has slowly but surely become less competitive, but (the decline) has been underestimated," Monti said at the Italian Automotive Association conference in Rome.
However, Italy has not intervened with financial support for its national car champion Fiat because its European losses are more than covered by revenue from its Chrysler unit in the United States.
Concerns about possible plant closures prompted Monti to meet Fiat and Chrysler Chief Executive Sergio Marchionne on Sept. 22 to look for ways to improve the company's manufacturing efficiency and boost exports.
But Monti's weekend announcement that he intends to resign from office before Christmas would suggest that any remaining hopes of export-boosting measures are slim.
"I do not see the car sales situation changing much next year," Roberto Vavassori, the Italian Automotive Association chairman, said earlier on Wednesday when asked for a market forecast. "That is the trend. In Italy, I think we could see a small contraction."
Western European car sales have fallen 7.3 percent to 10.33 million vehicles so far this year, according to latest data from Brussels-based industry group ACEA, led by double-digit declines in crisis-hit Greece, Italy and Portugal.
New car sales in Italy are set to fall about 20 percent this year to less than 1.4 million, government figures show. Before the start of the 2008 crisis, Italians bought about 2 million cars a year.