100,000 Fiat 500s to be built?

[rickaren]

Chrysler Said to Plan Production of 100,000 Fiat 500s in Mexico




Oct. 16 -- Chrysler Group LLC, the U.S. automaker run by Fiat SpA, is asking suppliers to plan to make enough parts for more than 100,000 Fiat 500 small cars to be built in Mexico, people familiar with the matter said.

Chrysler plans to sell three-fourths of the minicars in the U.S., Mexico and Canada and 25 percent in South America, said one of the people, who asked not to be named because the matter is private. The volume projections for the suppliers were for 104,000 to 120,000 vehicles annually.

Chrysler’s volume projections anticipate strong sales for the minicar, which is more than six inches shorter in length than Bayerische Motoren Werke AG’s Mini Cooper compact. The 500, called the Cinquecento in Italy, is a premium small car designed to compete with the Mini for customers, said Aaron Bragman, an analyst with IHS Global Insight Inc. in Troy, Michigan.

“We don’t think it will be priced much lower than the Mini Cooper, and if that is the case we think it will have a fairly limited appeal,” he said.

Chrysler Chief Executive Officer Sergio Marchionne has said he plans to begin selling the 500 in the U.S. by the end of next year. By aiming to produce about 80,000 for sale in North America, the company is indicating a sales volume that may surpass Mini Cooper in its first year on the market.

Global Insight projects U.S. sales of 40,000 to 50,000 for the 500 in its first full year. Mini Cooper sold a total of 60,992 vehicles in North America in 2008, with about 85 percent of sales coming from the U.S., according to the company.

Gas-Price Bet

Sales may be elevated by rising fuel prices that make small cars more attractive to consumers, as happened in 2008, when gasoline topped $4 a gallon, Bragman said.

“They are assuming that fuel prices are going to return to levels that they were,” he said. “I think that is a bit optimistic.”

The Mini is a premium small car, with a starting price of $19,500 for the basic Mini Cooper model, according to the company’s Web site. In England, the Fiat 500 starts at 8,700 pounds ($14,152) while the least expensive Mini is priced at 10,950 pounds, according to the companies’ Web sites.

Shawn Morgan, a Chrysler spokeswoman, said the company “doesn’t comment on speculation.” Chrysler, based in Auburn Hills, Michigan, hasn’t said where it will build the 500 or detailed any future product plans since the company left bankruptcy on June 10. It has set up an event on Nov. 4 to explain its business plan to journalists and financial analysts.

The automaker plans to build the 500 at a factory in Toluca, Mexico, said the people familiar with the planning. That plant now makes the Dodge Journey and Chrysler PT Cruiser wagons. Fiat builds the 500 in Tychy, Poland. Marchionne said it will be sold in the U.S. as a Fiat -- the brand’s lone model -- with four different variants.

This year through September, Fiat has sold 380,000 of the small cars globally. Turin, Italy-based Fiat has a 20 percent stake in Chrysler and has management control of the company.

Article Link:Chrysler Said to Plan Production of 100,000 Fiat 500s in Mexico - Bloomberg.com