[Chrysler300] Just posted on the Forwardlook list - WSJ - Fiat Models to Drive Chrysler

[John <spiers@xxxxxxxxxxxxxx>]

Wall Street Journal Article today, 27 Oct 09, RE Chrysler's Future: 

Fiat Models to Drive Chrysler 

New Lineup Will See Return of Alfa Romeo, End of Many Chryslers, Dodges and Jeeps 

By KATE LINEBAUGH and NEAL E. BOUDETTE 

Four months after exiting bankruptcy, Chrysler Group LLC is about to
unveil a product road map that relies heavily on vehicles from Italian
partner Fiat SpA while abandoning many of the U.S. car maker's own
models. 
The plan, due to be revealed Nov. 4, involves the return of Fiat's
premium, sporty Alfa Romeo brand to the U.S. starting in 2012,
according to people briefed on the plans. Chrysler also will introduce
to Americans the 500, Fiat's tiny car that is popular in Europe. 

Fiat and Chrysler also are working on several new vehicles with Fiat
technology for the U.S., including a midsize Chrysler sedan slated to
be released in 2012, according to these people. 
Meantime, Chrysler is preparing to phase out many current models,
including a number of Dodge cars, the Dodge Grand Caravan minivan and
several Jeeps. 
The sweeping changes represent a big gamble for Chief Executive Sergio
Marchionne, who has staked his reputation on the turnaround. Mr.
Marchionne, who revamped Fiat as its CEO, appears to be creating a
lineup that stays true to Chrysler's strengths in blue-collar muscle
cars and pickup trucks while adding European-styled vehicles to attract
a new, more white-collar customer. 

But Mr. Marchionne's challenge is to keep the company afloat until
2012, when the bulk of the new offerings will arrive. Chrysler is faced
with shrinking market share and an aging product lineup. While Chrysler
doesn't disclose its finances, Fiat has said repeatedly it won't inject
any money into the U.S. company despite receiving a 20% ownership stake
under its bankruptcy reorganization. Instead, Fiat is contributing
technology and management expertise. 

Shifting Gears at Chrysler 

The new Alfa MiTo sub-compact hatchback, displayed at the Geneva
International Motor Show in March, will be the first of the Alfa Romeo
models to arrive in the U.S., starting in 2012. 
"The biggest issue this company has is getting through the next few
years," said Rebecca Lindland, an auto analyst at IHS Global Insight.
"They are going to have a hard time maintaining market share let alone
increasing it." 
Chrysler spokesman Gualberto Ranieri declined to comment on the product
plan, due to be disclosed in a six-hour presentation next week by Mr.
Marchionne and senior executives to analysts and media at Chrysler
headquarters in Auburn Hills, Mich. 

For the next two years, Chrysler will have to rely mostly on its
current models. It is banking on two revamped vehicles due out next
year, a refreshed Jeep Grand Cherokee and Chrysler 300 sedan, as well
as boosting marketing spending on Jeep. 

Importing foreign-made Fiats in the meantime in any significant number
is unlikely because they would need to be modified to meet U.S. safety
and environmental standards, a costly and sometimes difficult process.
Unfavorable exchange rates also make European imports uneconomical
other than for luxury brands. 
Analysts worry that Chrysler's market-share erosion will continue as
consumers appear to favor smaller cars -- not the trucks and
sport-utility vehicles that make up the bulk of Chrysler's offerings.
Chrysler's share of the U.S. market fell to 8.3% in September from
11.1% a year ago, according to Autodata Corp. 
Chrysler's decision to increase the number of brands runs counter to
the current industry trend. General Motors Co. cut back to four brands
from eight under its own bankruptcy to reduce development and marketing
costs. Ford Motor Co. jettisoned its Jaguar and Land Rover and plans to
sell Volvo. Yet both Ford and GM have many more new products coming out
in the near future than Chrysler, which could further hurt that
company's sales, analysts say. 
"What everyone is counting on is enough of an uptick in sales that will
heal everybody fairly quickly," said David Cole, chairman of the Center
for Automotive Research in Ann Arbor, Mich. After cutting costs sharply
in bankruptcy, Chrysler "may not have a lot of smash hits but I think
there is a core market there that can be profitable for them." 
Chrysler received a $9 billion U.S. loan as part of its reorganization.
The company's cash position has improved since then, according to a
person familiar with the car maker, as production of vehicles restarted
in full. 

Changing Direction 

Under the new product plan, Chrysler will drop several Dodge products,
including the Caliber compact, Nitro SUV and Avenger sedan, but will
keep the Dodge Challenger, a muscle car, and the full-size Charger
sedan. 
"I like that plan a lot. Dodge can be the performance brand. They don't
have to be something to everyone, but they have to start being
profitable," said Ms. Lindland of IHS Global Insight. 

Many Chrysler and Jeep models also will die. The Jeep Commander is
slated to end next year. By 2012, the Chrysler PT Cruiser, Chrysler
Sebring midsize sedan and Jeep Compass and Jeep Patriot SUVs all will
exit the market. The auto maker also plans to phase out the Grand
Caravan in the next five years, leaving the Chrysler Town and Country
as the company's only minivan. 

Mr. Marchionne aims to introduce the Fiat 500 subcompact to the U.S. in
2011 and will build the model in Mexico, said a person familiar with
Chrysler's thinking. The 500 is viewed by some as Fiat's answer to the
Mini Cooper made by BMW AG. 

The Alfa Romeo products will be launched in 2012 with the MiTo
subcompact, followed by a midsize sedan in early 2013 and the Alfa
Milano midsize model, according to this person. All three will be made
in North America. 
Chrysler plans to introduce a new midsize sedan and compact in 2012 as
well as a compact Jeep a year or two later. All three will be based on
Fiat underpinnings. 

Reintroducing Alfa Romeos to the U.S. will come with challenges,
including defining the brand to a public that has a low understanding
of it or even may hold the brand in low regard. Alfa Romeo pulled out
of the U.S. market in the mid-1990s. 

"Bringing in the Alfa name I'm not sure how that is going to help
Chrysler," said Adam Lee, president of Lee Auto Malls in Maine. "I'm
just not convinced that people in this country have a warm spot in
their heart or feel intellectually that it is a good product." 

But Alfa will give Chrysler a premium product it hopes can compete with Audi or Infiniti, producing higher profit margins. 


      

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