Chrysler to start selling the Fiat 500 in early 2011

admin - Sunday, 10 October 2010 08:52

  Now that Chrysler has overhauled or refreshed most of its cars and trucks, consumers will soon give the automaker feedback on whether restyled sheet metal and upgraded interiors are good enough to boost sales of five brands while competitors continue to downsize.

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General Motors and Ford have been drastically reducing brands — they’ve sold or killed eight brands in recent years — with the thinking that fewer brands means more efficiency in advertising and dealer support, as well as more clarity for consumers.

Chrysler, by contrast, split Ram trucks from Dodge during its 2009 bankruptcy, giving the Fiat-controlled company four brands to manage — Chrysler, Dodge, Jeep and Ram — with more brands on the horizon.

Later this month, Chrysler will select about 200 dealers to sell the diminutive Fiat 500 later this year. In August, CEO Sergio Marchionne also said that as many as five Alfa Romeo models could be offered in the U.S. beginning in late 2012.

Chrysler is confident in its plan even though some question Chrysler expanding its brand portfolio, which will eventually leave the relatively small automaker — it has captured 9.5% of all U.S. sales so far this year — with six brands.

“You’re seeing brands such as BMW, Cadillac and Lexus talking about adding” subcompact cars, said Joseph Veltri, Chrysler vice president for product planning. “You either spread one brand very thin or make sure your brands are narrow and sharply focused. We’ve chosen the latter course.”

Chrysler is about to show off its strategy with great fanfare — and 16 new or revamped products — in the coming months, too.

Chrysler plan: Make every brand count

While Chrysler has consolidated its four U.S. brands under one roof at more than 80% of its 3,200 dealerships, the automaker is trying to differentiate each brand’s image to consumers.

Each brand is led by a president and CEO with profit and loss responsibility for vehicles sold under that name.

They are Michael Manley for Jeep, Ralph Gilles for Dodge, Olivier Francois for Chrysler and Fred Diaz for Ram. Laura Soave is the head of the Fiat brand for North America.

“Adding brands does add complexity,” said Dan Cheng, head of A.T. Kearney’s automotive practice in Southfield. “You must clearly understand: Who are the customers for my product? What do they need? What type of experience do I want my customers to have?”

Chrysler’s newest brands — Ram and Fiat — are distinct cases.

Ram trucks already had a relatively distinct identity in truck buyers’ minds. During the next few years, Ram will sell a new Fiat-based small commercial van that will compete with the Ford Transit Connect.

Fiat, which will initially sell just one car in the U.S., the 500, represents Chrysler’s effort to sell competitive small cars, a segment from which it has been absent.

The integration of Chrysler and Fiat technology and product development was an essential element in the government’s rescue package. Launching the Fiat 500 in the U.S. gives Chrysler a much needed toehold in the subcompact car segment.

Joseph Veltri, Chrysler vice president for product planning, acknowledges Chrysler still needs to cull its product lineup to eliminate vehicles that are so similar that some shoppers see little difference.

“We will be moving away from badge engineering vehicles,” Veltri said. “It’s not like in the past where every brand gets the same thing like where we had (Jeep) Compass and Patriot arguably stepping on each other’s toes.”

While GM and Ford have used their brand consolidation to shrink their dealer networks, Chrysler terminated about 25% of its pre-bankruptcy dealers on the grounds that it wanted all brands under the same roof.

Yet the 160 to 200 Fiat dealers who could be identified as early as next week, a Chrysler spokesman said, are expected to have a separate showroom, even though they will initially sell only one model — and that isn’t likely to generate a profit.

“After those first two years, they will bring in five models of Alfa Romeo,” said Detroit area dealer Dan Frost, who has applied for one of the few Fiat franchises to be awarded in Michigan. “Even at 30 or 50 cars a month, I’m not going to make any money. I will have no service revenue to speak of. I have no leases coming back in. But if you can hold on until Alfa Romeo comes in, then there’s a business case.”

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