Chrysler Tries To Fix US Sales With Fiat 500 And Alfa Romeo Imports

Chrysler's long haul out of bankruptcy continues, and the beleaguered brand needs more than a pick-up truck to emerge from the financial mire. Whether that relief will come in time and get traction remains to be seen.

As part of a restructuring plan to be announced Nov. 4, Fiat will introduce the Alfa Romeo and 500 to the United States market under the Chrysler banner. The “product road map” also calls for the dissolution of several Dodge car lines, the Dodge Grand Caravan minivan and several Jeeps.

As owner, Fiat has secured 20% of Chrysler’s debt and shares technology and management expertise, but provides no other financial support. The partnership is currently working to develop new Chrysler vehicles with Fiat technology.

The brand will have to tread water until 2012, when the Alfa Romeo and in-development vehicles are available on the market. Chrysler will introduce two new vehicles in 2011 besides the Fiat 500, the Jeep Grand Cherokee and Chrysler 300 sedan, with plans to increase ad spending on the Jeep brand. Industry experts remain skeptical that Chrysler can maintain market share, let alone yield more with their current product line.

The success of past imports bodes well for Chrysler. The Alfa Romeo enjoyed success amongst a niche demographic before it was phased out of the US in the 1990’s due to mechanical problems. The Mini Cooper has proven that Americans are interested in small vehicle, and the 500 can challenge BMW for market share. With an increasing consumer demand for small, fuel-efficient vehicles, the 500 could prove to be a boon for Chrysler.

Introducing Fiat models into the US market will open up Chrysler to a young, affluent demographic. Chrysler may build brand loyalty through sleeker Fiat designs, growing with their consumers from young adulthood to maturity.

Ultimately, branding will determine the success of the Fiat models. Fiat remains an obscure brand for young Americans, and older drivers will recall the brands problematic past. As Chrysler works to rebuild consumer confidence in their American brand, they may be overextending themselves by introducing a foreigner to the public at the same time. Chrysler and Fiat need to flawlessly fold the Alfa Romeo and 500 into the Chrysler stable, creating a cohesive brand portfolio.

The onus remains on Chrysler to develop competitive sedans and compacts, rebuild consumer trust, and meld the Fiat brand into their own. If they can pull off that hat trick, they could become a force to be reckoned with once again.