It won't be long, he indicated, before we see made-in-China cars all over the world. "Even assuming China were to export only 10 percent of what it produces, the risk we face in our home markets is enormous," Marchionne said.

Which automakers will lead China's export drive? The answer may surprise you.

At various times, several domestic Chinese automakers -- including BYD, Geely and Chery -- have announced their desire to enter the U.S. market. But aside from an occasional sighting at the Detroit auto show, they've chosen emerging markets like Brazil and Russia.

Yin Tongyao, president of Chery Automobile, recently was asked how soon Chinese cars would be ready to compete globally. "Dozens of years," he said with a straight face.

That's right, Yin confirmed, a quarter century.

The humble Yin may be exaggerating, of course. But why is Marchionne sounding alarm bells while Yin says it will be many years before Chinese cars are ready?

Perhaps Yin and Marchionne are both right - but for different reasons. Yin rightly believes that Chinese brands are not ready for mature markets like Europe and the U.S., while Marchionne is focused on the inescapable pressures of overcapacity.

Yin knows that Chinese automakers like Chery, Geely and Great Wall are enjoying an export boom this year, with overseas shipments up 50 percent year-on-year through July.

But he also understands that vehicles exported by Chinese carmakers are cheap and cheaply made. The average price of a car shipped from China is $6,500. These cars are purchased by customers with shallow pockets looking for a functional ride to get them from Point A to Point B. Sales are concentrated in low-income countries like Algeria, Syria, Brazil, Chile, Russia, Iran, Vietnam and Indonesia.

Only a tiny fraction of the exports -- a few thousand cars -- are making their way to developed markets like Australia, Italy and the U.K.

Last week, for example, Geely announced plans to export passenger cars to the U.K. (See related story in this newsletter.) However, export volumes are likely to be small.

Chinese automakers are still far too weak to compete in America or Europe. They lack strong brands, they have no service-and-parts networks, and they have a poor reputation for safety and quality. It will be many, many years before Chinese cars are equipped to compete with the world's best makes.

So, how to explain Marchionne's alarm? Most likely, Fiat's chief is not fearful of Chinese brands, but he understands what will happen when China produces too many vehicles.

According to the NDRC, China's top planning agency, China could have the capacity to build 40 million vehicles a year by 2020. Forty million. Demand is expected to be about 30 million units, the agency says.

In other words, China's potential overcapacity could be nearly equal to the entire U.S. market.

The story gets more interesting when you realize much of China's excess production capacity could belong to the international joint ventures operating in China -- companies like Volkswagen, GM, Nissan, Hyundai and Peugeot.

What happens if China's capacity outstrips demand? Global automakers will look for markets to dump their excess Chinese inventories.

Shanghai GM already exports tens of thousands of Chevrolet Sails. Honda's venture in Guangdong exports cars to Europe. Peugeot and Volvo have said they plan to export from China, too.

Once global automakers succumb to export pressures, momentum will accelerate. China will become the car factory for the world, churning out Chinese brands for developing markets and global brands for the wealthy countries.

Unions and politicians, of course, will work to stem the flow. But the direction of the tide is unambiguous. That's precisely the kind of "enormous risk" Marchionne senses.

Michael Dunne is president of Dunne & Co., a Hong Kong-based investment advisory firm that specializes in Asia's automotive markets.