Chrysler Tries to Sell Dealers on Fiat

Published August 30, 2010

| Associated Press

DETROIT - Chrysler on Monday told 400 dealers about its plans to bring the Fiat brand back to the U.S. after a 30-year absence, starting with the Fiat 500 minicar later this year.

Fiat-run Chrysler Group LLC wants the bulb-shaped 500 to become a strong contender in the U.S. small-car market, where the Detroit automaker has struggled for years. The car will be sold by about 165 Chrysler Group dealers in 125 mainly big-city markets starting in December. Chrysler hopes the tiny Italian car will help its lackluster sales.

Chrysler, Dodge and Jeep dealers who gathered in Detroit Monday are being asked to build separate showrooms and have separate sales and service staffs for the cars. Chrysler wants to create a distinctive European aura for the 500.

Dealers have until Sept. 22 to apply for Fiat franchises. Chrysler said it will select its dealers in the fourth quarter. The car will come in standard, convertible, high-performance and electric versions.

Fiat CEO Sergio Marchionne, who given control of Chrysler after it emerged from bankruptcy last year, turned around Fiat in five years as CEO. He is hoping to work the same magic with Chrysler.

But he won't be able to turn around the company with the 500 alone. Sales of minicars like the Toyota Yaris, Honda Fit and Ford Fiesta make up only about 5 percent of U.S. car sales. But the 500 can draw in customers and lend its European sophistication to Chrysler's entire lineup.

"Our dealers will be able to interact with a group of individuals that are not part of their current customer base," said Laura Soave, a former Ford Motor Co. and Volkswagen AG executive who is now head of the Fiat brand in North America. "These are individuals interested in Italian automotive design coupled with fuel-efficient technology."

Dealers chosen for Fiat dealerships will also get the first crack at selling Alfa Romeos when that Fiat-owned brand returns to the U.S. market in 2012.

Dealers also saw some future Fiat models, but Chrysler wouldn't comment on what they saw.

Fiat last sold cars in the U.S. in 1983, but pulled out of the country after a string of quality problems that gave it the nickname "Fix it Again Tony." On one model, warranty repair costs wiped out any profits in the U.S.

Until recently, Fiat had a similar reputation in Europe, but industry analysts say the company's new models are vastly improved. The brand got low customer satisfaction scores in J.D. Power surveys in the U.K., Germany and France this year, but the 500 scored well individually.

Although Marchionne has narrowed Chrysler's losses, it is still suffering from a lack of new models.

Sales to individuals, known as retail sales, fell 21 percent from January through June, compared with a rise of 11 percent for the industry overall. The six-month decline is worrisome because it's measured against 2009, a year in which Chrysler shut down its factories and went through bankruptcy.

Including lower-profit sales to fleet customers, such as rental-car companies, Chrysler's U.S. sales are up 11 percent through July.

The Fiat 500 will be built in Toluca, Mexico.

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