Bloomberg News

Chrysler Plans More Fiat Dealerships as 500 Misses Targets

November 16, 2011

(Updates with headquarters comment in the 12th paragraph.)

Nov. 16 (Bloomberg) -- Chrysler Group LLC, falling behind its North American sales goals for the Fiat 500, plans to open 20 more U.S. dealerships during 2012’s first quarter to sell the Italian brand.

North American sales of the Fiat 500 this year through October reached 21,380, a rate below Chief Executive Officer Sergio Marchionne’s forecast of 50,000 for 2011. The rollout was hindered by complications in opening new Fiat stores instead of using existing space at Chrysler dealerships.

Olivier Francois, head of the Fiat brand worldwide, started a U.S. marketing campaign featuring singer Jennifer Lopez in September. He is overseeing the introduction of the performance version of the 500, the Abarth, scheduled to reach showrooms early next year.

“The process of launching a new brand with three models, the 500, Cabrio and Abarth, is a process that takes time,” Francois said in an interview in advance of the Los Angeles Auto Show. “We continue to increase our customer awareness.”

Marchionne said today in Toledo, Ohio, that the lack of Fiat outlets has held back sales of the 500.

“We need to continue to work on distribution,” Marchionne told reporters. “We’ve had 50 dealers, 60 dealers trying to sell the car. I think Ferrari has more dealers than that.” The CEO was in Toledo to announce a $1.7 billion investment to update a Jeep sport-utility vehicle.

New Fiat Outlets

Chrysler has opened more than 120 U.S. Fiat stores this year, Richard Palmer, chief financial officer, said during Fiat’s third-quarter earnings call with analysts on Oct. 28.

Gualberto Ranieri, a Chrysler spokesman, said 130 U.S. stores should be open by year’s end and Francois said the number will rise to 150 by March 31.

“I think that’s a good level,” Francois said. “What is very important is not the quantity but the quality.”

Chrysler, based in Auburn Hills, Michigan, is majority- owned by Turin, Italy-based Fiat SpA. Marchionne is CEO of both companies.

Fiat is targeting a merger with Chrysler within the next three years. Marchionne said today instability in Italy may affect the decision on where the combined company will be based.

“I would be lying to you if I told you it didn’t,” he said. “That’s not to say that the current situation will force us to move away from Italy. We’re committed to the industrial backbone of the country. The country has to make some tough choices going forward, and it has to make them now.”

--With assistance from Craig Trudell in Toledo, Ohio. Editors: Bill Koenig, Jamie Butters

To contact the reporter on this story: Tim Higgins in Los Angeles at thiggins21@bloomberg.net

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net


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