HOUSTON — Group 1 Automotive Inc. announced the acquisition of David Taylor Cadillac Buick GMC in Houston and the opening of two new Volkswagen dealerships in the San Diego and Beaumont, Texas. The dealer group also announced the opening of Sterling McCall Fiat in Houston.

“The addition of these six franchises demonstrates our ongoing efforts to grow our business while further diversifying our brand mix,” said Earl J. Hesterberg, Group 1′s president and chief executive officer. “We are especially excited about increasing our partnership with Volkswagen of America following our successful acquisition of Metro Volkswagen in the Dallas market earlier this year.”

In total, the six franchises are expected to generate $188 million in estimated annual revenues, company officials said. David Taylor Cadillac Buick GMC is expected to add about $110 million in estimated annual revenues and complements the 11 existing dealerships that Group 1 operates in the Houston-Metro market area, reported F&I and Showroom magazine.

The Volkswagen Kearny Mesa and Beaumont franchises were awarded to Group 1 by Volkswagen of America. They represent new operating locations for Volkswagen in those markets, according to Group 1. The company anticipates that the two dealerships will add approximately $73 million in estimated annual revenues.

In August, Group 1 opened Sterling McCall Fiat in Houston, which is expected to generate $5 million in estimated annual revenues, according to the company. The three awarded franchises will be located in existing facilities alongside current operations and will be modified to the manufacturer’s image requirements.

Fiat SpA Chief Executive Officer Sergio Marchionne received $4.77 million (3.47 million euro) in total compensation last year, according to the Italian automaker’s annual report.

Marchionne is also CEO of partner Chrysler Group LLC, which, as a private company, is not required to disclose executive salaries. Spokesman Gualberto Ranieri said Marchionne gets a small stipend as a member of Chrysler’s board but does not draw a salary as chief executive.

“The man works exceptionally hard, crisscrossing the globe, managing two companies,” said analyst James Bell of Kelley Blue Book in Irvine, Calif. “He is pushing his philosophies and work ethic into Chrysler and employees speak highly of him.”

Ranieri noted Marchionne’s pay from Fiat will likely continue to lag those of top executives at Ford Motor Co. and General Motors Co., which have yet to disclose 2010 compensation figures, reported The Detroit News.

In 2009, Ford CEO Alan Mulally’s compensation totaled $17.9 million, and Marchionne earned about $6 million from Fiat.

GM has said CEO Dan Akerson will be paid about $9 million annually in total compensation, the same as his predecessor, Ed Whitacre Jr.

There is a $500,000 salary cap on Chrysler’s top 25 executives as one of the conditions of its government bailout. Fiat executives who have a management role with Chrysler as well can continue to be paid by Fiat.

In Italy, Marchionne earned a base salary of $4.2 million (3.05 million euro) last year, unchanged from 2009. But his compensation declined overall, in part because he earned a $1.87 million bonus in 2009, but was not paid a bonus in 2010.

In 2006, the Fiat board approved an eight-year stock option plan for Marchionne, including 5 million in options that could be redeemed over four years at 13.37 euro if performance targets were met.

Marchionne started 2010 with 19.42 million options, but many expired and he ended the year with 16.82 million. He has until November 2016 to exercise them at an average price of 9.09 euro, higher than today’s trading price of about 7 euro.

Marchionne’s term as CEO of Fiat expires in 2012. He has said he will not continue to hold the top job at both automakers indefinitely but has not said which set of responsibilities he plans to give up.

Chrysler recently provided performance awards to its workforce: $750 on average for unionized hourly employees and $10,000 on average to salaried employees. The top 50 earners did not receive a bonus.

Chrysler lost $652 million in 2010, but made $763 million on an operating basis.

Chrysler Group LLC wants dealers to avoid haggling with shoppers over the price of the Fiat 500 when reintroducing its parent company’s brand to America, betting that will make young customers more comfortable in showrooms.

“The pricing is the pricing,” said Laura Soave, head of the Fiat brand in North America. “The younger generation doesn’t haggle. They don’t feel comfortable with it. They hate the experience.”

Dealers have been given advertising standards that include prohibitions on promoting vehicles for less than the manufacturer’s suggested retail price, Soave said during an interview this week in San Diego. While automakers typically can’t prohibit discounts, the company limited the number of U.S. Fiat franchises to minimize competition among dealers, reported Bloomberg.

Chrysler, operated by Fiat SpA, is bringing the 500 and the Italian automaker’s namesake brand to the U.S. market at the same time as it prepares to sell a redesigned Chrysler 300 flagship sedan. The Auburn Hills, Michigan-based automaker may report a fourth-quarter loss of $99 million on Jan. 31, the average of three analysts’ estimates.

The vehicles are among 16 models Chrysler has refreshed or redesigned in the past year, most of which are just going on sale.

The 500 and redesigned 300 “really represent that this company is coming together,” said Rebecca Lindland, an industry analyst with IHS Automotive.

The automaker is more than one year into a five-year turnaround that’s supposed to return the company to profitability this year.

Clam-Shaped Hood

Fiat has already sold 500,000 of the 500 cars since 2007 in other parts of the world. The small car and its clam-shaped hood evoke the 500’s iconic design of more than 50 years ago.

Unlike the original, the small engine is in the front of the car. Engineers also worked to update the new 500 to U.S. tastes, including the addition of an automatic transmission, glove box and cup holders.

Early buyers of the 500 will have a greater interest in the manual transmission, which will get 33 mpg in combined city and highway driving, while eventually the majority of buyers will prefer the automatic transmission, Soave said.

Younger drivers “never learned how to drive a manual and they have no interest in driving a manual,” she said.

The Fiat 500, already being made in Mexico, will start at $15,500, not including the destination charge. Chrysler has said it expects to sell 50,000 of the cars in North America. Company executives expect to make additional money on the sale of accessories.

Demonstration units have begun arriving in showrooms, she said, and a marketing push is planned for March.

Customer Service

Early next month, Chrysler is bringing together about 300 people from the 130 U.S. Fiat dealerships for special training in handling customers and selling the car which can be configured in 500,000 ways, Soave said.

Dealers “need to be able to take the customers and show them how to accessorize the vehicle,” she said.

The sales “consultants” will take on non-traditional roles, including being the customer’s contact point for vehicle service, she said.

Carl Galeana, who will open Fiat franchises in Michigan and Florida, said he’s seeing a lot of excitement for the 500.

“The passion for a Fiat is much bigger than I thought,” he said in a telephone interview.

Like Saturn

Chrysler’s efforts to set up Fiat reminded him of how the predecessor of General Motors Co. went about setting up Saturn, Galeana said. He was a Saturn dealer until the Saturn brand was ended as part of GM’s bankruptcy in 2009. The Saturn experience included no-haggle buying.

“Customers, quite frankly, liked that process,” he said.

No-haggle policies can be effective if consumers feel like they’re getting a good deal already, Lindland, the industry analyst, said.

“Taking that haggling aspect out of it is a really smart move,” she said.

Chrysler expects the market for small cars in North America to more than double to 896,000 vehicles in 2014 from 442,000 last year, Soave said.

Consumer interest in small cars may not keep up with the number of new entries.

“The 500, right now I think, is more symbolic” for the return of the Fiat brand, Jeremy Anwyl, chief executive officer of automotive website Edmunds.com, said in a telephone interview. “I don’t see it as a massive volume car.”

While Soave is busy preparing dealers for a small car, Chrysler is also preparing them for the 300 large sedan.

New Book

Chrysler executives call the 300 and the 200 convertible “Chapter 2” of rebuilding the namesake brand. The first chapter was unveiled in November with the redesigned and renamed 200 mid-sized sedan — previously called Sebring — and the refreshed Town & Country minivan.

This is “our opportunity to tell the world that you don’t have to cross an ocean to get a great car,” Olivier Francois, head of the Chrysler brand, said this week in San Diego.

The new 300 starts at $27,170, excluding destination charges. The previous model’s starting price was $27,260, according to Chrysler’s website.

Chrysler’s average incentive spending on the 300 last year rose to $5,042 from $4,765 in 2009, according to researcher Autodata Corp. The industry average for passenger cars last year was $2,563.

Chrysler plans to pull back on incentive spending with the new vehicle, Francois said in an interview earlier this month.

“We choose to be very transparent,” he said. “We are going to aim for both loyal customer targets and to conquest.”

DETROIT – Fiat lifted its stake in Chrysler to 25 percent today as CEO Sergio Marchionne prepares for an upcoming round of meetings with bankers to refinance Chrysler’s debt and to ready an initial public offering of shares.

Fiat said in a statement that it had raised its ownership in Chrysler to 25 percent from 20 percent at no financial cost under the terms of a deal that had been negotiated with the U.S. Treasury as part of Chrysler’s bailout, reported Automotive News.

The announcement, which came as Chrysler showed off new and revamped vehicles at the Detroit auto show, increases the likelihood that Fiat will own a majority of Chrysler by the end of the year.

Marchionne said he and other Chrysler executives would begin more intensive meetings with Wall Street bankers in the current quarter to prepare for an IPO expected by the end of the year.

Refinancing a priority

The immediate priority will be to develop a plan to refinance Chrysler’s bailout debt to the U.S. Treasury, Marchionne said.

“We have spent some time with the financial institutions the last two or three months and we are going to get into a much deeper discussion in the first quarter of 2011 as to how to get that done,” Marchionne told Reuters Insider.

“I am expecting that by the second quarter of this year we will have a plan that we can announce,” he said, speaking on the sidelines of the Detroit auto show.

Marchionne said it was possible that a Chrysler IPO could come before the fourth quarter, but that would depend in part on the strength of the stock market. “I think we need to do some more work before we open our trap,” he said.

Marchionne said he hoped that Fiat’s progress in restructuring Chrysler since it took control of the automaker in 2009 would silence the skeptics and win over potential investors and creditors.

Chrysler used the Detroit auto show — the industry’s largest trade show — to showcase a redesigned and re-engineered version of its 300 sedan as well as a revamped mid-size sedan now known as the 200 and a refreshed version of its minivan.

“I think we’ve proved over the last 19 months what this group can do. A lot of people were incredibly skeptical about our ability to launch all of these products within a short period of time,” Marchionne said.

Winning approval

Fiat was given management control of Chrysler and an initial 20 percent stake with the opportunity to raise its holdings to 35 percent by meeting certain performance targets set by the Obama administration.

By winning approval to build a Fiat-designed, fuel-efficient engine at a Chrysler plant in Dundee, Mich., the Italian automaker was cleared to raise its stake in Chrysler to 25 percent.

If Fiat helps Chrysler increase sales outside North America and builds a vehicle in the United States that achieves 40 miles-per-gallon in fuel efficiency, the Italian automaker can raise its stake in Chrysler to 35 percent.

Fiat recently spun off its truck and tractor division now known as Fiat Industrial. That spin-off was seen as clearing the way for the creation of a bigger trans-Atlantic auto group led by Marchionne.

Chrysler executives said they hope the second-generation 300, which had been developed in part before the automaker’s bankruptcy, would win back luxury consumers who would not have considered its vehicles in recent years.

The first-generation 300 was a smash debut for Chrysler five years ago but the automaker was criticized for not investing enough in refinements to keep it competitive with newer full-size sedans from rivals like the Taurus from Ford Motor Co.

LOS ANGELES – Chrysler Group today released a list of 130 dealerships that have received letters of intent to get Fiat franchises, reported Automotive News.

Once dealers fulfill the requirements of the letter of intent and provide the facilities they promised in proposals made to Chrysler, they can begin taking orders for the Fiat 500 small car, which is being introduced in North America here at the Los Angeles Auto Show.

Though a few North American spec Fiat 500s will arrive in dealerships in December, none will be delivered to customers until January. A volume market launch is planned for March.

The 500 will be designated a 2012 model, said Ralph Kisiel, Chrysler spokesman.

Chrysler plans to name additional dealers to boost the total Fiat network to about 165. Chrysler chose dealers from 119 markets it identified as having strong growth potential for small car sales over the next five years. All dealers on the initial list hold Chrysler franchises.

More franchises to come

Chrysler is talking to additional dealers, some of which are non-Chrysler Group franchisees.

Chrysler began awarding letters of intent on Oct. 20 but did not release a full list until today.

The dealerships will carry the same naming nomenclature. All will be known as Fiat of (Fill in the city name). The showroom will be called the Fiat Studio, where trained Fiat specialists will help consumers custom order their cars. Accessory sales will also be a big part of the operation.

The letter of intent is the first step to getting the franchise. Dealers must make the investments they promised Chrysler to obtain the franchise, Kisiel said.

The Fiat 500 will be manufactured at Chrysler’s plant in Toluca, Mexico. The initial version will be a two-door hatchback, which goes on sale in January as a 2012 model. Chrysler plans a convertible version sometime next year, and an Abarth sporty version in 2012, followed by an electric version.

Fiat dealers may also get the Alfa Romeo franchise, scheduled to return to America in 2012.

AutoNation leads the way

Among the big winners on the list was AutoNation Inc., the nation’s largest publicly traded dealer group, which received seven letters of intent. Mike Jackson, AutoNation CEO, has been bullish on the prospects for Fiat.

AutoNation earlier announced it had been awarded the seven letters of intent.

“We are excited about the Fiat product,” AutoNation spokesman Marc Cannon said. “The Fiat 500 clearly will resonate with the American consumer. As gas prices continue to creep up, we will be well positioned to benefit.”

Chrysler expects to sell 50,000 Fiats in 2011 in the United States, growing to a peak of about 78,000 in 2013. For comparison, Mini sold 54,077 U.S. units in 2008 before the recession.

The modern version of the 500, which is an Italian icon, went on sale in Europe in 2007. The North American version will receive a number of modifications. Unlike the European version, its 1.4-liter FIRE (Fully Integrated Robotized Engine) will get Fiat’s MultiAir technology, which optimizes engine performance in all operating conditions.

Fiat claims it improves performance and fuel economy by roughly 10 percent. The suspension and interior have also been modified for American tastes.

Fiat last sold vehicles in the United States in 1982.