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August 31, 2010 Chrysler dealers get details on adding Fiat sales | detnews.com | The Detroit News

Chrysler dealers get details on adding Fiat sales

Detroit -- Chrysler Group LLC dealers who came to Detroit worried about how much it would cost to add the Fiat brand to their showrooms, emerged from a meeting Monday with Chrysler officials energized about the brand and eager to submit their bids for a franchise.

"There was a lot of interest in that room," said Chuck Eddy of Bob and Chuck Eddy Chrysler Dodge Jeep of Austintown, Ohio.

Eddy was among 400 dealers from across the country who have three weeks to submit a proposal. Chrysler will choose dealers for 165 markets in October; that number will grow to 200 over the next few years as more Fiat products become available for American buyers.

As part of their partnership Chrysler and Fiat SpA will develop vehicles together, and use their distribution networks to sell each other's products.

Chrysler dealers invited to the Detroit Institute of Arts to hear the Fiat pitch were pleased to learn they won't have to immediately establish separate showrooms and service facilities to qualify to sell the Fiat and Alfa Romeo brands.

"You don't need to start with one," said Chrysler spokesman Gualberto Ranieri. "We have to be pragmatic."

Dedicated showroom areas within a Chrysler dealership will suffice until standalone facilities are ready, dealers were told during Monday's session, which lasted about four hours. Dealers also can start out using existing repair bays for Fiat service work.

Eventually, however, Fiat must be recognizable as a separate brand with its own facilities.

The clarification was enough to convince Louis Vedova III of Windward Dodge Chrysler dealership in Hawaii to submit a proposal by the Sept. 22 deadline.

Consumers don't drive as far in Hawaii, but gas costs $4.50 a gallon and buyers are conscious of fuel-efficient vehicles, he said.

Bill Golling, of Golling Chrysler Jeep Dodge in Bloomfield Hills, already is working with his general manager on their proposal. Under Fiat's "crawl, walk, run" strategy of preparing facilities, Golling said he may be able to separate a portion of his existing facility, to give Fiat its own entrance, and then expand as the business grows.

Consultant Van Conway, president of Conway MacKenzie Inc. in Birmingham, said building a dealership can cost millions of dollars, and asking dealers to do so for an untried brand can be risky. It also could weaken Chrysler, Dodge, Jeep and Ram franchises just as those dealers are recovering and preparing for an onslaught of new vehicles.

A smarter strategy is to have dealers carve out space in existing facilities, get some parts and inventory, train a mechanic and start selling Fiats to gauge consumer interest before investing further, Conway said.

"The Fiat brand offers our dealers the opportunity to be part of a unique experience," said Laura Soave, head of Fiat Brand North America. Soave said the brand will attract new customers "interested in Italian automotive design, coupled with fuel efficient technology."

Sales get rolling in December with the tiny Fiat 500 hatchback, followed by a convertible and performance versions next year, and an electric 500 in 2012. Pricing for the 500 will be revealed when the car debuts in November at the Los Angeles auto show.

The Alfa brand returns to the U.S. market in 2012 with a midsize sedan and wagon and a compact crossover, according to Fiat's five-year product plan released in April. In subsequent years there could be a subcompact car, compact car, another SUV and a full-size luxury convertible.

"It fills a gap for us," said Alan Helfman of River Oaks Chrysler Jeep in Houston, who needs about six months to build a facility. "We don't have any little cars."

Helfman figures dealers face an investment of $250,000 to $500,000 but will be rewarded with modern facilities and "a cornucopia of vehicles to sell in a few years."

Eddy, the dealer in Austintown, Ohio, is pleased the Alfa brand will be added. "Once we get Alfa," Eddy said, "that's when things really get exciting."

He'll be making a pitch for a dealership: "I just hope they take it."
 
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