Fiat SpA (F.MI) Wednesday reported a wider-than-expected second-quarter net loss due to weaker sales and its chief executive said he was still keen on spinning off the Italian group's core car business.

Sergio Marchionne said a spinoff was inevitable, but he first wanted to be sure that the auto unit would be able to fend for itself in a competitive industry going through its worst crisis in decades.

"The timing is unclear," he told reporters. "It may take two years, it may take three years to get it done, but I think there will be a point in time in which Fiat will be of sufficient size and muscle to be independent."

Marchionne's plan to spin off the business came after he offered to take over Adam Opel GmbH last month. But he put it on hold after letting his offer for the German car maker expire when other contenders appeared.

Marchionne said he was open to talks with Germany and General Motors Co., Opel's parent, but on his terms, adding that Opel was not crucial for Fiat's survival. "We aren't threatened by anyone in the marketplace."

Germany and GM have yet to choose one of three other bids for Opel.

Like other car makers, Fiat has cut costs and tried to work down its debt in the face of a sharp drop in sales. It has also sought to gain scale by entering into a partnership with Chrysler Group LLC. Opel had been the next on the list.

Government incentives to buy small, less polluting cars worked in Fiat's favor. In the first half of the year, it had the smallest unit sales drop among Europe's largest car makers, down 1.1%, allowing it to surpass French rival Renault SA (RNO.FR) as the region's fifth-biggest car maker with a 9.1% market share.

Worldwide, Fiat sold 591,000 cars and light trucks in the quarter, down 8.3%.

Although these incentives have provided some relief to manufacturers in Europe this year, analysts expect 2010 to be a difficult year when many of those incentives expire.

But Marchionne said that Fiat's car business, which includes the Lancia and Alfa Romeo brands, would still make a profit.

Fiat's Iveco truck and CNH Global NV (CNH) construction divisions were more problematic because their businesses were seen staying depressed for most of 2009 with signs of recovery becoming visible only in the fourth quarter.

CNH, a U.S. subsidiary that also makes farming equipment, suffered a 21% drop in revenue, and revised downward its unit sales forecast for the year to a 25% to 30% drop from a range of 15% to 25%.

However, Fiat confirmed its 2009 targets, including a net profit of more than EUR100 million and a net industrial debt of less than EUR5 billion.

The debt level fell to EUR5.7 billion at the end of the quarter from EUR6.6 billion at the end of the first quarter. Cash rose to EUR6.4 billion, up EUR1.3 billion from the first quarter.

For the quarter, Fiat posted a net loss of EUR179 million compared with a net profit of EUR646 million in the same period a year ago. The loss was bigger than the median of forecasts of EUR110 million compiled from a survey of analysts by Fiat. Revenue fell 23% to EUR13.2 billion.

Fiat's shares ended down 1.7% at EUR7.80. Although results were in line if not better than expectations, analysts pointed to CNH's sales forecast downgrade as one reason for investors to lock in profits after the stock outperformed its peers by gaining 68% in value this year.

Company Web site: www.fiatgroup.com

-Gilles Castonguay, Dow Jones Newswires; +39 02 5821-9908; gilles.castonguay@dowjones.com