Orange County’s Chrysler dealers are going all out in an intramural competition to get Fiats onto their lots.
“I threw the kitchen sink at my proposal,” said Jon Gray, president of Costa Mesa’s Orange Coast Chrysler Jeep Dodge, whose pitch includes a proposed stand-alone Fiat showroom on Harbor Boulevard. “We offer a dream location for them.”
At stake is the right to roll out the Fiat 500, a mini hatchback with retro flair due in dealer showrooms by early next year.
Auburn Hills, Mich.-based Chrysler Group LLC, which is operated by dominant shareholder Fiat Group Automobiles SPA of Italy, is expected to announce its lineup of U.S. Fiat dealers sometime this month.
Only a couple of local Chrysler dealers are expected to be selected.
Among the roster of contenders are Orange Coast Chrysler Jeep Dodge, Tuttle-Click Automotive Group, which has two Chrysler dealerships in the county, and Don-A-Vee Chrysler Jeep in Placentia.
OC is one of 14 markets in California set to get Fiat franchises. Chrysler is expected to choose 165 dealers in 119 markets nationwide.
Chrysler dealerships chosen to handle Fiat are set to dedicate a small space to the Italian brand—they’re even being referred to as studios.
Shoppers will be able to check out a few models on the floor and explore various customization options.
Dealerships will be more hands on, like an Apple Store, said Gray of Orange Coast Chrysler. There won’t be any office cubicles or anyone standing around.
“The car will be a lot more fun to sell,” Gray said.
Chrysler has been sifting through dealer proposals, which were due last month, company spokesman Ralph Kisiel said.
Laura Soave, head of the Fiat brand in North America, outlined dealership guidelines to potential franchisees in Detroit earlier this year.
Among other criteria, dealers will be chosen based on how many autos they sell and financial performance, Kisiel said. In the first year, the goal is to sell 50,000 Fiat 500s in North America—about on par with BMW AG’s Mini Cooper.
Fiat plans to stage the U.S. debut of the vehicle along with a convertible version next month at the LA Auto Show.
The Fiat 500 will be Chrysler’s first subcompact car. Subcompacts, which include Honda Motor Co.’s Fit and Toyota Motor Corp.’s Yaris, usually are the smallest car in an automaker’s lineup.
Subcompact buyers “will be a new customer for us,” Kiesel said.
U.S. Market
This is the Fiat’s second try at cracking the U.S. market.
In the 1980s, Fiat failed miserably here. Quality problems led to a common joke that Fiat stood for “Fix it again, Tony.”
“They just weren’t ready for the U.S. market,” said James Bell, executive market analyst for Irvine-based Kelley Blue Book.
At the time, Fiat wasn’t doing well in Europe, either.
Sergio Marchionne, chief executive of Fiat and Chrysler, retooled the Italian automaker when he took over in 2004.
In 2005, General Motors Co. paid $2 billion to get out of a deal to buy Fiat. The break-up fee helped finance Fiat’s comeback.
“They’ve been a big success in Europe for years now,” Bell said.
In 2009, Fiat bought a sizeable stake in Chrysler, which was kept afloat amid the economic crash with $14 billion in federal loans.
Chrysler has paid back nearly $4 billion to the Treasury Department, which has a 10% stake in Chrysler.
Marchionne now is working to get Chrysler back on track. Fiat is selling Chrysler brands in Europe.
Eventually Chrysler will sell Fiat-designed autos under Chrysler and Dodge nameplates.
In the meantime, Chrysler plans to freshen up some of its existing models.
Fiat’s expertise is small to midsize cars, though it also makes the luxury Ferrari, Maserati and Alfa Romeo brands.
The Fiat 500 is billed by the company as offering the best of both worlds—a lot of style and a relatively low price tag.
No official price has been announced yet. Auto industry watchers are guessing at a price of about $15,000.
All Fiat 500s sold in North America will be made in Mexico, where production is expected to start in December.
Small cars typically present automakers with a challenge on profits, but manufacturing in Mexico will likely keep costs relatively low.
Plans call for Fiat to push customizations of the 500, selling customers on extras such as fancy wheels, decals and various interior and exterior color options.
“They’re following the Mini model,” Bell said.
Challenges
Fiat will have its challenges, namely being another small car in a crowded segment.
“Fiat is coming into this space at a tough time,” Bell said.
After years of focusing on big cars and sport utility vehicles, automakers are beefing up their small to midsize car lines with an eye on future federal fuel regulations that call for higher-mileage vehicles.
A potential obstacle for Fiat and the subcompact market is that their sales have typically been driven by high fuel prices, Bell said.
“If fuel prices rise, then there is room for several stylish, fun-to-drive subcompacts to succeed in the U.S. market,” he said. “If fuel prices stay stagnant, both the subcompacts and the hybrids going forward might have a bit of a struggle.” n
