Chrysler said Tuesday that it planned to set up about 200 outlets by the end of the year to sell the Fiat 500, an Italian designed subcompact. The dealerships will be run by existing Chrysler dealers and in many cases located on the same property, but they will have separate showrooms and employees.
The strategy runs counter to a general trend of consolidating multiple brands into one showroom. It also requires dealers to commit significant resources to a lineup that initially has a single model. A convertible, the 500 Cabrio, is scheduled to arrive in 2011, followed by a battery-powered 500 in 2012, but Chrysler has not revealed plans to expand Fiat beyond that.
BMW used a similar approach to successfully reintroduce its Mini brand to the United States nearly a decade ago, requiring dealers to build auxiliary showrooms to sell the Mini Cooper. But investing in an expansion for what analysts consider to be a niche model, at a time when auto sales are depressed and many dealers are struggling, is a gamble.
“If I were a dealer, I would be somewhat reluctant to make that investment,” said Erich Merkle, an automotive analyst and president of Autoconomy.com in Grand Rapids, Mich. “You have to go and build a new facility to sell a brand that really is going to take a considerable amount of time to get any kind of volume.”
A Chrysler spokesman, Ralph Kisiel, said the company intended to have Fiat dealerships in 125 markets in about 41 states. He said most would be concentrated in metropolitan areas where small cars were already popular and where demand was expected to increase.
Executives sent letters this week to all 2,320 Chrysler, Dodge, Jeep and Ram dealers inviting them to apply for a Fiat franchise. Fewer than 10 percent will be selected, and the locations will be announced in September, Chrysler said.
Interest in the 500 among Chrysler dealers has been high, and given the small number of outlets being selected, Mr. Merkle said he expected the company would receive more than enough bids, despite the requirements.
“All these years I’ve been waiting and waiting and waiting” for Fiat to return, said Mr. Gulla, the owner of Larchmont Chrysler Jeep Dodge. “It’s an emotional situation as well as an economic one.”
The Fiat 500 is a major piece of Chrysler’s efforts to diversify a lineup that has relied heavily on trucks and sport utility vehicles, hurting sales as American consumers began seeking more fuel-efficient alternatives. The company plans to build more than 100,000 of the vehicles a year at a plant in Mexico, sending half to the United States and half to South America.