DETROIT – Chrysler Group dealers who initially get Fiat franchises will be expected to start with small showrooms — 2,500-3,000 square feet — enough to display three or four cars, reported Automotive News.

Such a small showroom will be sufficient to sell the Fiat 500 minicar, which will arrive in dealerships at the end of this year. Chrysler expects to initially name 165 dealers in 119 U.S. markets to sell the Fiat 500. The network could expand to about 200 locations as more products become available, according to Ralph Kisiel, Chrysler spokesman.

Chrysler unveiled its plans for the Fiat franchise to about 400 dealers this morning at the Detroit Institute of Arts. The dealers were chosen from markets around the country that Chrysler has identified with strong growth potential for small-car sales over the next five years.

“We have determined the areas of the country where they can succeed and grow,” Peter Grady, Chrysler’s vice president for network development and fleet, said in a statement today.

Chrysler anticipates selling 50,000 Fiat 500s in the United States next year, and about 78,000 units by 2013 after additional models are added, according to one dealer who attended the meeting.

About 400 Chrysler Group LLC dealers from across the United States are expected to gather at the Detroit Institute of Arts for an intensive session intended to help them decide whether to make the investment needed to sell the Fiat and Alfa brands, The Detroit News reported.

A pillar of the success of the partnership between Chrysler and Fiat SpA, which was formed in June 2009 when the Auburn Hills automaker emerged from bankruptcy, was that the two companies would develop vehicles together and take advantage of their respective distribution networks to sell each other’s products.

Fiat has a strong dealer network in Europe and South America and already has started selling Chrysler’s vehicles abroad.

The Italian automaker stopped selling Fiats here in 1983, and ceased mainstream Alfa Romeo sales in 1995. Sales continue of the more exotic Ferrari and Maserati brands and the low-volume Alfa Romeo 8C sports car.

Fiat will return to the U.S. market in December with a North American version of the tiny Fiat 500. It will be produced at Chrysler’s Toluca, Mexico, plant, which will make about 120,000 of A-segment-sized cars annually. That output will be split between North America and South America.

The Alfa brand will return with a mid-size car and crossover in 2012, followed by a larger SUV and luxury sedan.

Dealers from 119 select U.S. cities will be briefed Monday on vehicles in Fiat’s five-year plan.

Sergio Marchionne, chief executive for both Chrysler and Fiat, will not attend.

Presenters will include Laura Soave, head of the Fiat brand for North America; and Peter Grady, Chrysler vice president of Network Development & Fleet.

Including Chrysler staff, about 600 people are expected to attend, said Chrysler spokesman Ralph Kisiel.

Dealers are paying their own travel costs but Chrysler is providing ground transportation and food.

RIMINI, Italy – Fiat S.p.A.’s chief executive said the third quarter is proceeding well and confirmed the automaker could raise its outlook for 2010 at the end of the third quarter, sending its shares higher, Reuters reported.

Fiat, Europe’s fifth-biggest car maker, is looking at 2010 as a transition year to relaunch growth, CEO Sergio Marchionne said on the sidelines of a conference.

Marchionne confirmed Fiat, which has a 20 percent stake in U.S. carmaker Chrysler, would probably raise its full-year guidance in a couple of months.

Asked how Fiat was performing in the third quarter, he said: “Quite well. We have seen an extremely weak European car market, as of course was to be expected.

“You needed a period to restablish a base for growth,” he said.

Among markets outside Europe, overall car sales in Brazil were up almost 11 percent in the first half of August compared with 2009. Fiat is Brazil’s biggest automaker.

By 15:32 CET, Fiat shares were up 2.59 percent at 9.31 euros, while the STOXX Europe 600 Auto index was up 1.19 percent.

An analyst said Marchionne’s upbeat comment on the third quarter “is probably more interesting to us in the market rather than repeating the thing about guidance.”

Investors are looking for 2010 results ahead of Fiat’s guidance, said the analyst, who spoke on condition of anonymity. The market consensus is for revenues of about 53 billion euros ($67.31 billion), ahead of Fiat’s outlook for 50 billion euros, he said.

Marchionne also confirmed the Alfa Romeo brand is not for sale. “I said I will not sell it,” he said.

Volkswagen AG is eyeing the potential acquisition of Alfa Romeo should Fiat consider putting it up for sale, Automotive News Europe’s German sister publication Automobilwoche reported on Monday.

As Chrysler Group LLC prepares to lay out its strategy for selling a subcompact car from partner Fiat SpA, the move is raising concerns among some dealers struggling to sell the vehicles already on their lots, The Wall Street Journal reported.

The launch of the Fiat 500 would introduce a fifth brand into the Chrysler family, alongside the Chryslers, Dodges, Jeeps and Ram trucks most dealers carry now.

Chrysler and Fiat hope the tiny Fiat 500 becomes a sales and pop-culture hit along the lines of the Mini Cooper.

But the new nameplate comes to the U.S. as the company’s rivals are paring down the number of brands they offer, not adding to them, to contend with a shrunken car market.

General Motors Co. now fields only four makes—down from eight—while Ford Motor Co. will have just two after it shutters its Mercury division by year end.

Some Chrysler dealers also say they are concerned about investments those chosen to sell the Fiat 500 will have to make. Chrysler, for instance, wants dealers to build separate showrooms for Fiat, which could cost hundreds of thousands of dollars each.

“The enthusiasm for the Fiat coming to the market has diminished,” said one East Coast Chrysler dealer who is still weighing whether he will apply to sell the 500.

“At first, it was something that would be mixed in” among Chrysler’s current models on the showroom floor, this dealer said. Now, “they are going to have to present a compelling story and product to back me investing at least $1 million to build a new showroom.”

Chrysler spokesman Ralph Kisiel had no comment regarding showroom costs.

Chrysler plans to outline its strategy for the Fiat 500 at an Aug. 30 gathering of 600 dealers at the Detroit Institute of Arts. The goal is to pick 200 dealers from the group to sell Fiats in selected markets.

Sergio Marchionne, chief executive of both Chrysler and Fiat, said Monday “the multibrand experience is already a way of life in the U.S.” despite GM and Ford paring offerings.

“In the case of GM, they had brands that were overlapping. Chrysler doesn’t have that problem. Jeep is unique, Dodge is a widely popular brand and Ram is about truck,” he said at Chrysler’s Toledo, Ohio, operations during a visit by Vice President Joe Biden.

Dealers will have until Sept. 22 to make a formal proposal on how they will achieve the Fiat franchise requirements, such as building a separate showroom and appointing a separate staff to showcase Fiats. Chrysler is offering no financial aid to dealers to comply.

The Fiats will start with the 500 model arriving in December from a Chrysler plant in Mexico. A convertible is expected in 2011.

Plans also call for the sale of Fiat’s Alfa Romeo vehicles in the U.S., which Mr. Marchionne said on Monday most likely would happen through the Fiat showrooms. Chrysler said it will locate Fiat dealers in top urban markets with the strongest small-car sales.

If 200 suitable Fiat dealers can’t be found within the 600 selected to attend next week’s presentation, Mr. Marchionne said he will shop the idea around outside the Chrysler dealer network.

Some Chrysler dealers support the Fiat plan. Alan Helfman, in Houston, said he is interested in a Fiat franchise and plans to come to Detroit to learn more. “It sounds like an excellent opportunity,” he said.

Other dealers who plan to attend the presentation said they want Mr. Marchionne to clarify how the five brands are supposed to fit together long term.

One Chrysler dealer in Florida said he was spooked by the experience of dealers who sunk money into selling the Smart, a tiny car made by Daimler AG, and the Mini Cooper, from BMW AG, and haven’t seen a payback.

Smart is sold through dedicated dealerships. Sales fell from 24,000 in 2008 to about 14,000 in 2009 and are down 61 percent this year through July. Mini has seen its sales languish since peaking at 54,000 in 2008. BMW dealers sold 45,225 last year and sales year to date through July were down 1.9 percent.

The Fiat 500’s arrival is being planned as industry sales are tepid. J.D. Power and Associates last week cut its 2010 U.S. sales forecast to 11.6 million vehicles, down from 11.7 million. Gas prices, which helped pushed many Americans into smaller cars in 2008 when they topped $4 a gallon, remain below $2.50 on average.

Another potential problem for some dealers is franchise placement. In some markets Fiat dealers could compete for the same customers, according to franchise-placement maps viewed by The Wall Street Journal.

For instance, in the Phoenix area Chrysler plans four franchises, double the number of Mini dealers. Three of the four would compete in the suburban Scottsdale market. In Las Vegas, Mini has one dealer while Chrysler wants two selling Fiats. Chrysler’s Kisiel had no comment on franchise locations.

DETROIT – The Detroit Institute of Arts will serve as the backdrop for Chrysler Group’s “The Fiat Experience” for dealers on Aug. 30.

Chrysler has invited roughly 600 dealers to Detroit to hear the company’s plans for relaunching the Fiat brand in North America – and registration for the event opened today.

The Detroit Institute of Arts makes a dramatic setting for the introduction of a European brand to North America. The museum’s cavernous Rivera Court features a series of murals by Mexican artist Diego Rivera depicting the history of the automobile industry.

Jerry Golinvaux, owner of Roseville Chrysler Jeep Dodge in Roseville, Minn., wasted no time signing up for the Detroit meeting, confirming his attendance via email this morning. He and his son David, the general manager, will attend.

“We very much would like to have it. We think it’s going to be a great vehicle that will augment some of the Chrysler products,” Golinvaux said. “We do understand that eventually, as the sales volumes increase to the levels we would move it into a separate facility. We see the small car industry in the United States increasing in the next few years.”

Golinvaux believes Chrysler will only choose two Fiat dealerships in the Twin Cities and he believes he’s qualified to be one of them.

“We have recently remodeled a facility that meets all of Chrysler’s facility requirements. We have met the Gold Standards level under their new program in the first two quarters. Our dealership is well capitalized. We’re profitable. We exceed all the capital requirements. We exceed the minimum sales responsibilities. We’re pretty excited about it. We think we’re an outstanding candidate for the franchise.”

Chrysler spokesman Ralph Kisiel said the company doesn’t know how many dealers have accepted the invitation to come to Detroit. Visiting dealers will stay in Detroit’s MGM Grand Hotel and Casino. The dealers will be responsible for paying their own expenses.

Only two representatives from each dealership will be allowed to attend: the dealer principal and/or the general manager as listed on the dealer agreement.

An invitation was sent to the dealers on Aug. 9 by Laura Soave, head of Fiat North America, and Peter Grady, Chrysler’s vice president of network development and fleet.

The company will ask interested dealers to present proposals by Sept. 22. The automaker will choose the Fiat franchisees in early October.

The first Fiat to go on sale will be the Fiat 500 minicar, which is scheduled to go into production in Toluca, Mexico during the fourth quarter. Three other 500-based models are scheduled to go on sale by 2013, including a convertible, a sporty Abarth and a four-door hatchback with a raised roof.

“The requirements for Fiat are straightforward: separate sales and display at launch, transitioning to a full dealership facility as the volume grows,” Grady said in a statement.

Dealers may also get the chance to sell Alfa Romeos. The brand is expected to return to the U.S. market in 2012.

Chrysler spokesman Ralph Kisiel declined to discuss future Alfa Romeo products or any Alfa Romeo network, but said the Fiat network “might be expanded as more new products are added to the lineup.”

Chrysler extended the invitations to dealers in 36 states and Puerto Rico, with plans to establish franchises in 119 markets. Chrysler plans to grant about 200 Fiat franchises across those markets.

The company said those markets have “strong small-car registrations and growth potential in the small-car segment over the next five years.”

Kisiel said some non-Chrysler dealers might get an opportunity for Fiat franchises if no Chrysler dealers come up with satisfactory proposals in a given market.

“In that kind of circumstances we might consider a non-Chrysler dealer,” Kisiel said. “We won’t know that until these dealers come to the meeting and learn what they need to know and submit their proposals.”

Chrysler said it will evaluate dealers on a number of criteria, including:

• Sales performance;
• Plans for a separate Fiat facility;
• Comprehensive marketing plans;
• Compliance with dealer standards; and
• Proper capitalization.

Fiat acquired management control of Chrysler last year as part of the U.S. government’s rescue of the automaker. Under the alliance, Fiat is using Chrysler’s sales network to reintroduce the Fiat brand in America. Fiat withdrew from the U.S. market in 1984 and Alfa Romeo left in 1995.

DETROIT – Chrysler Group has invited roughly 600 dealers in 119 U.S. markets to apply for franchises to sell Fiat cars, Automotive News reported.

The invitation was sent to the dealers by Laura Soave, head of Fiat North America, and Peter Grady, Chrysler’s vice president of network development and fleet. Dealers who accept the invitation will attend a program called the Fiat Experience on Aug. 30 in Detroit.

Chrysler will use the event to present details of its plans for the Fiat network. The company will ask interested dealers to present proposals by Sept. 22. The automaker will choose the Fiat franchisees in early October.

The first Fiat to go on sale will be the Fiat 500 minicar, scheduled to start production in Toluca, Mexico, in the fourth quarter. Three other 500-based models are scheduled to go on sale by 2013, including a convertible, a sporty Abarth and a four-door hatchback with a raised roof.

“The requirements for Fiat are straightforward: separate sales and display at launch, transitioning to a full dealership facility as the volume grows,” Grady said in a statement.

Dealers may also get the chance to sell Alfa Romeos; the brand is expected to return to the U.S. market in 2012. Chrysler spokesman Ralph Kisiel declined to discuss future Alfa Romeo products or any Alfa Romeo network, but said the Fiat network “might be expanded as more new products are added to the lineup.”

Chrysler extended the invitations to dealers in 36 states and Puerto Rico. The company said the 119 markets have “strong small-car registrations and growth potential in the small-car segment over the next five years.”

Chrysler plans to grant about 200 Fiat franchises across those markets.

Kisiel said some non-Chrysler dealers might get an opportunity for Fiat franchises if no Chrysler dealers come up with satisfactory proposals in a given market.

“In that kind of circumstances we might consider a non-Chrysler dealer,” Kisiel said. “We won’t know that until these dealers come to the meeting and learn what they need to know and submit their proposals.”

Chrysler said it will evaluate dealers on a number of criteria, including:

• Sales performance
• Plans for a separate Fiat facility
• Comprehensive marketing plans
• Compliance with dealer standards
• Proper capitalization

Fiat acquired management control of Chrysler last year as part of the U.S. government’s rescue of the automaker. Under the alliance, Fiat is using Chrysler’s sales network to reintroduce the Fiat brand in America. Fiat withdrew from the U.S. market in 1984 and Alfa Romeo left in 1995.

DETROIT — After a 26-year absence, Fiat dealerships will be returning to the United States — but in a small way, The New York Times reported.

Chrysler said Tuesday that it planned to set up about 200 outlets by the end of the year to sell the Fiat 500, an Italian designed subcompact. The dealerships will be run by existing Chrysler dealers and in many cases located on the same property, but they will have separate showrooms and employees.

The strategy runs counter to a general trend of consolidating multiple brands into one showroom. It also requires dealers to commit significant resources to a lineup that initially has a single model. A convertible, the 500 Cabrio, is scheduled to arrive in 2011, followed by a battery-powered 500 in 2012, but Chrysler has not revealed plans to expand Fiat beyond that.

BMW used a similar approach to successfully reintroduce its Mini brand to the United States nearly a decade ago, requiring dealers to build auxiliary showrooms to sell the Mini Cooper. But investing in an expansion for what analysts consider to be a niche model, at a time when auto sales are depressed and many dealers are struggling, is a gamble.

“If I were a dealer, I would be somewhat reluctant to make that investment,” said Erich Merkle, an automotive analyst and president of Autoconomy.com in Grand Rapids, Mich. “You have to go and build a new facility to sell a brand that really is going to take a considerable amount of time to get any kind of volume.”

A Chrysler spokesman, Ralph Kisiel, said the company intended to have Fiat dealerships in 125 markets in about 41 states. He said most would be concentrated in metropolitan areas where small cars were already popular and where demand was expected to increase.

Executives sent letters this week to all 2,320 Chrysler, Dodge, Jeep and Ram dealers inviting them to apply for a Fiat franchise. Fewer than 10 percent will be selected, and the locations will be announced in September, Chrysler said.

“We want our best performing dealers to get these franchises,” Kisiel said, adding that Chrysler has focused on “markets that have a high number of small-car registrations.”

The Fiat 500 is a major piece of Chrysler’s efforts to diversify a lineup that has relied heavily on trucks and sport utility vehicles, hurting sales as American consumers began seeking more fuel-efficient alternatives. The company plans to build more than 100,000 of the vehicles a year at a plant in Mexico, sending half to the United States and half to South America.

Access to a dealership network in the United States was a major reason that the Italian carmaker’s chief executive, Sergio Marchionne, pursued a takeover of Chrysler. The 500 fills a hole in Chrysler’s lineup, but also gives Fiat a quick way to re-establish itself in the United States.

In November, Chrysler CEO Sergio Marchionne told an audience of reporters and analysts in Auburn Hills, Mich., that “Chrysler and Fiat have become inextricably intertwined.”


On Wednesday, he will reveal just how interconnected the two carmakers will be in the coming years, reported Automotive News.

Wearing his hat as Fiat CEO in Turin, Marchionne will unveil a five-year plan for the Italian carmaker. The Fiat plan calls for broad cooperation between Fiat and Chrysler in many operations, such as manufacturing, marketing, sales and finances.

Marchionne has the companies working together in ways that luxury carmaker Daimler AG never dreamed of in its troubled decade-long marriage to Chrysler.

“With Daimler, there was never a real chance to have an integrated pair of companies,” said David Cole, director of the Center for Automotive Research in Ann Arbor, Mich. “Daimler was scared to death of having Chrysler taint Mercedes. 
There are great possibilities between Fiat and Chrysler. They’re in same price classes.”

On Wednesday, Marchionne and his team are expected to announce these developments:

• Near-luxury brand Alfa Romeo will build a mid-sized sedan and station wagon in the United States at Chrysler factories. The debut of the Alfa Romeo Giulia in 2012 would mark the return of Alfa to the United States after a 17-year absence.
• Using the same Compact Wide architecture underpinning the Giulia, Alfa also will build a large crossover.
• The Chrysler and Lancia brands will share platforms. For example, Lancia will get a version of the Chrysler Sebring replacement due later this year and a version of the Chrysler Town & Country minivan.
• A small Fiat car with four doors and styling similar to the 500 will be sold in the United States in 2013.
• A possible Fiat compact sedan that will be imported from a Fiat joint venture factory in Serbia for sale in the United States. If approved, it will arrive in 2013.
• A Fiat-badged version of the Dodge Nitro SUV will be sold in Europe by the end of this year.

During the presentation Wednesday, Marchionne and his lieutenants are expected to give updates on the financial performance of Fiat and Chrysler. Sales targets for 2014 for the combined companies are expected.

The companies have combined in other areas too. Olivier Francois is running both Chrysler and Lancia brands and acts as global marketing chief for both Chrysler and Fiat.

On the manufacturing front, Chrysler’s North American factories will build as many as 400,000 Fiat, Lancia and Alfa Romeo brands by 2014.

Marchionne’s plan calls for reducing the number of platforms used by the two automakers and producing sufficient vehicles on each platform to gain economies of scale.

Fiat, the Italian carmaker that helped Chrysler emerge from bankruptcy, may wait to turn around the U.S. business before deciding on a share sale or spin-off for its automotive division, Bloomberg News reported.

The Italian company’s stock has risen 21 percent this month on speculation that CEO Sergio Marchionne may carve out Fiat’s biggest unit as a new company. Fiat executives have so far sent mixed signals about whether an initial public offering of the division will take place.

A separation of the auto manufacturing operations, which generated 56 percent of Fiat’s revenue last year, would give Marchionne an entity to facilitate future alliances, and a share sale would generate cash for international expansion.

The maker of Puntos and Ferraris must show progress at Chrysler, of which it owns 20 percent, before convincing investors to buy shares in the unit, said Royal Bank of Scotland analyst Jose Asumendi.

“Fiat has too much on its hands right now to think about a possible spin-off,” said London-based Asumendi, who advises holding Fiat’s stock. “The priority is to resurrect Chrysler, make it profitable and repay its government loans.”

Fiat CEO Sergio Marchionne said Monday that a new Chrysler plant that will build Fiat engines in southeastern Michigan represents “a huge step forward” for the integration of Chrysler into Fiat, reported The Associated Press.

Marchionne told an investors conference call that the investment would bring Fiat’s 1.4 liter, four-cylinder engine technology into the United States, and that would mean that Fiat can bring those engines into Brazil without duties. Fiat has a large auto business in Brazil.

Marchionne is steering the turnaround of Chrysler, becoming CEO of the U.S. automaker after Fiat took a controlling share in Chrysler in June.

Chrysler is investing $179 million in the Dundee plant near Detroit, which is expected to begin production of the engines in the fourth quarter of next year. The engine will power the Fiat 500 minicar, which will be made in Mexico and go on sale in the United States by the end of the year, and will eventually replace engines in other Chrysler vehicles.

Marchionne told a Fiat analyst conference call that the Chrysler investment is not big but “it is a huge step forward in terms of the integration of Chrysler into Fiat.”

Michigan was competing with Saltillo, Mexico, for the plant.