Initially, Fiat was going to make its plans on Chrysler known at the end of summer, however, Fiat pushed this back to November when it discovered there wasn't a lot of product planing going on at Chrysler in the period that Cerberus owned Chrysler.
Sergio MarchionneFiat's CEO, Sergio Marchionne, told reporters at the Frankfurt International Motor Show "We were surprised by how little had been done in the past 24 months." "We have to be absolutely clear about what we want to do with Chrysler and, as a management team, where the organization is going to be in five years," Marchionne said, according to the industry newspaper Automotive News.
Last Friday, the board of Chrysler Group met to approve this five-year product plan, and although the full document won't officially be released until mid-November, a few details have emerged.
Peter Fong
Peter Fong, Chrysler brand CEO and head of sales for all Chrysler Group brands, has been reported as saying the Fiat 500 will be sold through Chrysler brand dealers only. It was initially speculated that the Fiat 500 would be retailed through its own branded showrooms much like the Mini is. However, the relative small volumes being talked about for the 500 preclude a dedicated dealer network.
What Fong says is the 500 most likely will have a dedicated area in Chrysler-brand showrooms. Currently, about 80 percent of Chrysler dealers now offer all three of the group's brands: Chrysler, Dodge and Jeep. Fong says there hasn't been a decision of who or how many of these Chrysler dealers will offer the 500.
The factory that will make the Fiat 500 hasn't been officially announced yet, but it is widely accepted as it will be in Toluca, Mexico. Fiat prefers Mexico because of its free-trade agreement with Brazil and its lower labor costs. Fiat, which is the market leader in Brazil, plans to export about a third of the 100,000 Fiat 500s planned for yearly production in Toluca to Latin American countries.
This decision to make the 500 in Mexico is not without some controversy as the United Auto Workers union had hoped the 500 would be made at a U.S. factory. The UAW cost saving concessions and Chrysler receiving $15.5 billion in government aid underlining their feelings.
However, cost is a major issue on a high content small car like the Fiat 500. The 500 has won numerous deign awards and also was the first sub compact car to achieve a 5-star crash rating (safety at all cost with no impact on pricing...). All this engineering and design talent costs a lot of money, yet it is included in a relatively low cost car. And pricing is going to be the biggest issue with the 500, as ,although it's less than the Mini, it is smaller and the fancier versions are considered pricey by American standards. So pricing (and profit margins) will have be smaller to fit American tastes, that's where the Mexican low manufacturing costs come into play.
Of course all this can change if there is a special deal cut with the UAW/government. But, after all the concessions and bailout money, that's not likely.
So, a summary of the news, as of right now, we have the Fiat 500 being sold through select Chrysler dealers, being built in Mexico with an estimated 30,000 of the 100,000 unit capacity being sold in Latin America.
We'll hear more about Chrysler's five year plan and how the Fiat 500 will be marketed in mid-November. Stick around!
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