Chrysler wants to start with 165 Fiat dealerships in the United States

Chrysler Group dealers who initially get Fiat franchises will be expected to start with small showrooms--2,500-3,000 square feet--enough to display three or four cars.

Such a small showroom will be sufficient to sell the Fiat 500 minicar, which will arrive in dealerships at the end of this year. Chrysler expects to initially name 165 dealers in 119 U.S. markets to sell the Fiat 500. The network could expand to about 200 locations as more products become available, said Ralph Kisiel, a Chrysler spokesman.

Chrysler unveiled its plans for the Fiat franchise to about 400 dealers on Monday in Detroit. The dealers were chosen from markets around the country that Chrysler has identified with strong growth potential for small-car sales over the next five years.

“We have determined the areas of the country where they can succeed and grow,” Peter Grady, Chrysler's vice president for network development and fleet, said in a statement.

Chrysler anticipates selling 50,000 Fiat 500s in the United States next year, and about 78,000 units by 2013 after additional models are added, according to one dealer who attended the meeting.

Alfa Romeo on deck

Four Fiat 500 models are planned including the two-door hatchback arriving late this year; a convertible in 2011, and an Abarth performance version and an all-electric car in 2012.

But dealers who want the Fiat franchise will probably need to think about investing more money later in larger, stand-alone facilities. That's because Fiat dealers could be first in line to get a crack at the Alfa Romeo franchise, which returns to the U.S. market in 2012, the company has hinted in recent comments.

By the end of 2014, seven Alfa Romeo models will be sold in the United States, according to dealers who attended the meeting. Dealers in attendance stressed that Chrysler didn't promise Alfa Romeo to them.

Kisiel said dealers can start with a proposal for a separate Fiat showroom and grow from there. “As more product arrives, we would be looking for a full separate dealership versus just a separate showroom,” he said.

A Mini rival

Chrysler officials told dealers that the Fiat 500 will offer lots of customization opportunities and that they expect customers to pre-order cars and choose from a long list of options and colors. They told dealers sales personnel will function almost like interior design consultants in helping customers choose from all the options available to them.

That approach will pit the 500 in direct competition with BMW AG's Mini brand.

The 500 will be made at Chrysler's Toluca, Mexico, factory with Fiat 1.4-liter MultiAir engines shipped from Dundee, Mich.

Dealers who attended the event said Chrysler's presentation was organized and impressive.

David Kelleher, owner of David Dodge Chrysler Jeep in Glen Mills, Pa., described Chrysler's capital requirements as “reasonable.” He declined to give specifics.

“This is an opportunity to diversify yourself from being a high volume American brand dealer” into something different, “not competing and tripping over” other dealerships selling the same brands, he said. “That gives me diversity in my structure. That helps me weather some storms.”

Carl Galeana, owner of Van Dyke Dodge in Warren, Mich., said he is encouraged because he owns a Saturn franchise that will be going out of business at the end of October.

“This reminded me of one of my first Saturn meetings,” he said. “They signaled what the brand was and what they hoped it would be. It was very Saturn like.”

Galeana was also encouraged because Chrysler didn't rule out the notion that single-point dealers who don't have all four Chrysler brands could obtain a Fiat franchise.

Chrysler is giving dealers plenty of leeway to come up with workable proposals. Grady said that Chrysler dealers who also had Saturn franchises would be ideal candidates. Dealers who have Chrysler's Millennium 2 dealership design, which includes a used car building, would also be ideal, Grady said, according to a dealer in attendance.

Dealers have until Sept. 22 to submit proposals.

By Bradford Wernle- Automotive News