With today’s official confirmation that Fiat’s US market brand boss, Laura Soave, has been replaced by Timothy Kuniskis, there’s more than a little attention being paid to the Fiat 500’s stateside sales and marketing. Which is something of a curious state of affairs; after all, when the 500 was introduced to Europe, it was quite well-received by the press and public. In hopes of tracking down some kind of explanation for this discrepancy, I hit Youtube looking for ads introducing the Fiat 500 to European markets. The first spot I found can be seen above, and it encapsulates how I feel the 500 probably should have been introduced to the US: with one simple, smart, timeless ad. Instead we got a flurry of disjointed, uncoordinated efforts, with Jennifer Lopez eventually dominating the Cinquecento‘s image almost by default. Could this explain why the 500’s US sales have disappointed?
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As the world struggles to come to grips with economic uncertainty, Bertel has been reporting that Japanese automakers are abandoning their homeland for lower-cost production centers overseas. Now, with economic turmoil shifting to Europe, it seems that Fiat could possibly be preparing for a pullback from Italy. Two basic factors are driving Fiat towards reconsidering its global manufacturing footprint: first, its struggles in the European market where margins are slim and dropping, second, its battles with Italian unions. Though Marchionne’s latest comments are ambiguous at best, some see these factors pushing the Italian automaker away from the market that gave it birth.
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After an early downturn in sales, it appeared that Fiat might be distancing its 500 from the Jennifer Lopez-dominated image that hasn’t been panning out so well. With the debut of the 500 Abarth at the LA Auto Show, the ad shown above kept the sex-factor high, but focused far more on the male market. Perhaps sensing a shift in direction, Bloomberg asked Fiat/Chrysler CEO Sergio Marchionne last week if the brand’s boss Laura Soave would be keeping her job despite the weak sales. Still undecided, Marchionne replied in the affirmative

For the time being.

That was last Wednesday. Over the weekend, something seems to have changed…
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Fiat’s 500 may be flopping early in the game, but then, what do you expect from a car with barely 100 horsepower? Though I’m sure the Cinquecento is better with a stick shift, my brief time in an autobox version left me feeling that Fiat’s italophile morsel could use considerably more brio. Well, consider the problem solved, as the 160 HP Abarth version has finally been shown in US-market spec, and sales should start sometime early next year. And based on European reactions to the Abarth, it should be a little firecracker. So, enthusiasm solved… now Fiat just needs to do something about its high prices, uninspiring fuel economy and wretched marketing. Then everything will be just fine… although I still wouldn’t hold my breath for 50k units per year.

I was not the only person to predict that the Fit 500 would enjoy strong initial sales and then flop as the novelty wore off… and I was half right! Sales climbed early, peaking at around 3k units per month this summer before dropping precipitously in September and October. In August were still wondering if the 500 could become a classic, but as of November 1, Fiat 500 inventory stood at a staggering 184 days. Now, Automotive News [sub] quotes UAW officials as saying that

Chrysler Group has suspended production this month of the 1.4-liter FIRE engine that powers the Fiat 500 in North America because of slow U.S. sales of the subcompact

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Throw “Sport” on a car, and I’m going to expect certain things from it. So I wasn’t kind to the first FIAT 500 I reviewed. But, as with people, I’m always willing to give a car a second take from a more amenable angle. To avoid bits I didn’t care for, I requested the base-level “Pop” trim with an automatic transmission. Chrysler counter-offered a top-level Lounge. In brown. With brown leather. Not quite what I asked for, but as a member of the Brown Car Appreciation Society (sans card, alas) I felt duty bound to accept.

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It’s becoming increasingly clear as time goes on that the Chrysler five year plan promulgated in November 2009 was merely a stopgap strategy aimed at stabilizing the then-recently-acquired firm while CEO Sergio Marchionne plotted a strategic course globally. Now, with news that Alfa is going to be re-launched with the US as its major focus (possibly replacing Dodge), we’re getting a better and better picture of where the Sergio Show is headed with his transatlantic alliance. In an interview with Automotive News Europe [sub], Marchionne gives the latest snapshot

In his vision, Alfa Romeo and Jeep both have the DNA and the rich history capable to make them the alliance’s two global brands. “We need to continue to globalize Jeep and Alfa, so the development of architectures and engines that are designed to support these two brands is crucial, and everything else becomes almost secondary,” he said.

Chrysler clearly won’t be a global brand, as its products are rebadged as Lancias in Italy. Fiat will offer full lineups in Europe and South America, but only the Fiat 500 will be a truly global brand, in a role Marchionne compares to BMW’s MINI. Dodge doesn’t even rate a mention in this interview, which can only be interpreted as more evidence that it will be lucky to survive at all.

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Chrysler CEO Sergio Marchionne wants an end of what he called “two classes” of employees represented by the United Auto Workers union. The two-tiered system “creates the kind of environment that doesn’t appear to work in the same direction that we’ve been trying to use to establish the new basis of Chrysler,” Marchionne told Reuters. He continued: (Read More…)

As the automaker that’s least-prepared for upcoming increases in federal fuel economy standards, it was more than a little surprising to find that Fiat’s five year plan for Chrysler did not involve any significant plans for hybrid drivetrain development. But more recently, CEO Sergio Marchionne has said a hybrid Chrysler 300 would be offered in 2013, and the firm hooked up with the feds to work on a hydraulic hybrid drivetrain. And though new CAFE regulations offer generous credits for hybrid pickups, a policy choice that rescues Chrysler’s investment in “Two Mode” hybrid technology, more will have to be done. For, in the words of Marchionne [via Automotive News [sub]],

I have no other way of getting to 2025 numbers than by going to hybrids

But Chrysler won’t rely fully on hybrids in order to make the significant fuel economy improvements it needs. In fact, it will be relying as much on diesels and compressed natural gas (CNG) drivetrains as anything else.

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Chrysler-Fiat’s Sergio Marchionne is joining the chorus of doomsday CEOs. “2012 will not be a great year for the European market,” Marchionne told Reuters. He is looking to the U.S. and to Brazil for salvation – despite GM’s Akerson having made equally dire forecasts for America.

Fiat is doing so badly at home in Europe that the U.S. and Brazilian markets are now the biggest contributors to the combined group’s profit. (Read More…)

After seeing the sad little yellow Fiat convertible in a Denver junkyard, let’s admire a happy little yellow Fiat convertible that’s still managing to evade the cruel jaws of The Crusher. (Read More…)

Imagine, this tiny Italian sports car hanging on long enough to evade the junkyard until the second decade of the 21st century! We have no way of knowing how many of its 40 years were spent as a “get to it someday” project car, under a tarp in a side yard, but it doesn’t have the weeds-and-mouse-poop look of a car that spent many years outdoors. I found this little jewel in the same Denver self-serve yard that gave us this ’79 Alfa Romeo Sport Sedan. (Read More…)

Considering the United Auto Workers’ VEBA fund is still Chrysler’s second-largest shareholder, CEO Sergio Marchionne is taking an amazingly hard line with the union. With a GM deal long done, and Ford’s deal moving towards approval, Chrysler is the last automaker on the UAW’s to-do list… and Marchionne tells Bloomberg he’s up for a fight if necessary, saying

I sincerely hope that we don’t have to get to arbitration. But if necessary, Chrysler will go there. We and GM are completely different

Marchionne is reportedly pushing the UAW for a number of tough concessions, including a mere $3,500 signing bonus (compared to $5k at GM and a reported $6k at Ford), and the elimination of a planned 2015 cap on entry-level “Tier Two” workers (at 25%). And though both of these are tough asks, he’s using UAW boss Bob King’s concept of union internationalism as a cudgel against the UAW, playing Italian unions off their American counterparts. And as a result, he could earn Chrysler a favored place among America’s unionized autoworkers.
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Under Penske management, the Smart minicar brand sold fewer than 6,000 vehicles last year, capping a sales decline that led Mercedes to take back management duties for the brand. And, according to the new folks in charge of Smart, there’s only one real problem with the brand: awareness. Or, more precisely, lack thereof. We’ve heard this song before from Smart’s new GM, but now Ernst Lieb, boss of Mercedes U.S.A., is picking up the tune, telling Automotive News [sub] that

With the marketing activities that we’re going to have, we’ll see some positive momentum. The biggest problem the car has right now: Nobody knows it.

Which, of course, is nonsense. Nonsense that allows you to appear aware of the sales problem without acknowledging a single problem with the product itself, but nonsense none the less. And Smart’s not the only micro-car brand that’s reaching for it either, as Fiat-Chrysler marketing boss Olivier Francois has the exact same excuse for Fiat’s weak start, telling AdAge

I don’t think we have a car problem; people love the car. I think we have an awareness problem.

Are Americans incapable of seeing, recognizing or being aware of anything that weighs less than 3,000 lbs? Or is it possible that there are a few things wrong with the Smart and 500?
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Today, credit rating agency Moody’s cut the rating on Fiat’s bonds down two notches from Ba1 to Ba3. Merrill Lynch wrote  in a letter to customers that it is ”worth remembering that Fiat debt is already junk rated so there will not be a change in the credit investor base for Fiat, but cost of refinancing goes up.”

Officially, bonds in the Ba family are regarded to be of “questionable credit quality”. In the business, “Ba1” is known as junk, B3 as “bad junk”. It is interesting what got Fiat the demerits: Chrysler. (Read More…)