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Fiat, Alfa Romeo Rollout Gives Some Chrysler Dealers Agita

August 24, 2010
The Italian automaker must first get the nod to take over Opel, however

The Italian automaker must first get the nod to take over Opel, however

Next Monday, August 30, Chrysler will bring 600 dealers to the Detroit Institute of Arts, where CEO Sergio Marchionne will share his vision for the U.S. rollout of the Fiat brand, and subsequently, Alfa Romeo.

He will have a lot of 'splainin' to do.

According to a report in the Wall Street Journal, many dealers are nervous about the addition of Fiat to Chrysler's American family. First, it seems  counterintuitive for the automaker to add a fifth brand when rivals GM and Ford have both been slimming down -- to great advantage. Then there's the matter of cost: Marchionne had originally envisioned Fiats sprinkled throughout existing Chrysler showrooms, but now, he's pushing dealers to build dedicated Fiat showrooms, to the tune of hundreds of thousands of dollars each.

The question is whether the one model Fiat plans to launch in the U.S. -- the 500 subcompact -- can justify that kind of expense. Clearly Marchionne is hoping that the 500 will cause a sensation, like the Smart fortwo and the MINI  Cooper did, once upon a time. Problem is, neither of those small rides is performing well in the U.S. just now: thanks in part to stable, affordable gas prices, year-to-date sales of MINI have slipped nearly 2%, and Smarts have fallen over 60%. Given that those two -- especially the Cooper -- represent some of the 500's competition, that doesn't augur well.

For its part, MINI is hoping to address that sales problem with the new Countryman, which will provide a sliver of variety to the MINI lineup and which, according to MINI product manager Gary Kung, "will underwrite the rest of MINI line". (Note: public reaction to the Countryman will probably need to improve first.)

Fiat, however, won't have even that minimal level of diversity: when the brand launches this December, it'll boast just the 500 and possibly the sportier Abarth variant, with a soft-top 500 to follow late in 2011. Alfa Romeo rides will use the same show space, and the Giulia sedan and wagon will offer some range, but they won't appear until late 2012 at the earliest. (Assuming that Volkswagen doesn't buy the brand, of course.)

This is a risky bet for Marchionne, and clearly he's not interested in playing it safe. (Then again, he's not really gambling with his own money.) We'll see if his "go big or go home" wager pays off.

[WSJ, Autonews]

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