Tag Archive | "Chrysler Group LLC"

Fiat Poised to Raise Stake in Chrysler to 35 Percent

Fiat SpA will have completed the measures required to increase its stake in Chrysler Group LLC next year to 35 percent, up from the current 20 percent, Sergio Marchionne, CEO of both automakers, said Thursday.

The actions required to increase Fiat’s stake in Chrysler were established when the two companies formed a partnership in 2009, The Detroit News reported. They include launching the tiny Fiat 500 in the United States later this year with a fuel-efficient four-cylinder engine and the possibility of a new 85-horsepower two-cylinder engine.

The second step is a new Dodge compact car, based on the Alfa Romeo Giulietta that is being engineered to meet the specifications of the North American market. The new Dodge, which will replace the Caliber hatchback, will hit the market late next year and achieve 40 mpg.

The third requirement is international distribution of Chrysler products, which Marchionne said has suffered a setback in Latin America. Still, he remains hopeful issues involving regulations of the dealer network in Brazil will be resolved by year’s end. Fiat has assumed responsibility for distribution of Chrysler vehicles in Europe.

Marchionne said there is no immediate need to exercise the right to raise Fiat’s stake above 51 percent, nor is it legally feasible until Chrysler has repaid the loans it received in 2009 from the U.S. and Canadian governments.

He said Fiat does not need that kind of control, operationally, right now, but he did not rule out the wisdom of ratcheting up the stake in the future if the value of Chrysler grows. The CEO noted the value of Chrysler is listed as zero on Fiat’s books, but he has learned the value is much higher from his experience running the company.

“If Chrysler continues to improve and prosper, there will be some value there,” said analyst Joe Phillippi of AutoTrends Consulting Inc. in Short Hills, N.J.

Marchionne said time is needed to provide better clarity on the long-term capital structure of Chrysler, the right level of indebtedness, how the debt is financed, and the timing to issue public shares (likely second-half 2011).

“These are things that are being examined by the board of directors of Chrysler,” he said.

The CEO repeated his expectation that earnings guidance for Chrysler will be raised when Chrysler’s third-quarter results come out Nov. 8.

On Thursday Fiat reported a net third-quarter profit of $267 million due to higher sales of trucks and tractors. Revenues were up 12 percent to $18.9 billion in the quarter.

Fiat now says 2010 revenue should exceed $77 billion.

Marchionne reiterated the Alfa Romeo brand is not for sale, despite interest expressed by Volkswagen AG. Discussions continue about adding light commercial vehicles and even medium-duty trucks from Fiat’s Iveco brand to the Ram brand in North America.

“We continue to work on the American option but I have no immediate solution for it today,” Marchionne said.

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Chrysler Recalls Vehicles for Possible Fire Hazard

Chrysler Group LLC is recalling 26,397 vehicles, saying a malfunction with the power steering pressure hose may cause steering fluid to leak over a hot engine and cause a fire, Reuters reported.

The affected vehicles include the 2011 Dodge Ram, the 2010 Chrysler Sebring, Chrysler 300, Dodge Charger, Dodge Avenger, Dodge Challenger and Dodge Journey, according to a letter dated Oct. 18 posted on the National Highway Traffic Safety Administration website.

A spokesman for Chrysler, the U.S. automaker controlled by Fiat SpA (FIA.MI), did not immediately comment. The company said in the letter that it was not aware of any injuries or accidents related to this issue.

Chrysler notified U.S. safety regulators of the problem earlier this month. The supplier of the hose is YH America South Carolina LLC.

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Chrysler Naming U.S. Fiat Dealers

AUBURN HILLS, Mich. — Chrysler Group LLC is notifying dealers that have been chosen to sell the Fiat brand in the United States, including three from Metro Detroit, reported The Detroit News.

Golling Chrysler Jeep Dodge Ram in Bloomfield Hills; Carl Galeana’s Van Dyke Dodge in Warren and his dealership in Fort Myers, Florida; and David Fischer’s Novi location of the Suburban Collection initially will be the only ones authorized to sell the Italian brand in Michigan.

Chrysler, which partnered with Fiat SpA when it emerged from bankruptcy in 2009, first wants about 165 locations in 119 metro markets as the only product they will have to sell is the tiny Fiat 500 hatchback. The car will be unveiled to the public in November at the L.A. auto show.

But, by the end of 2012, when there are more versions of the 500 as well as additional and larger Fiat models, the plan is to increase the number of dealerships to 200 locations, which could include another Michigan franchise.

Those dealers would also be in line to add the Alfa Romeo brand when it returns to the U.S. market in 2012.

The three Detroit-area dealers have been notified they are part of the original rollout and will prepare their facilities and get ready to take orders for the tiny car that goes on sale in December. A marketing launch is planned for March when production and volumes will have ramped up. So far, Chrysler is still producing pilot versions of the car at its Toluca, Mexico plant, which will soon be followed by models authorized for sale.

The majority of dealers are being notified today. The rest, many of whom had incomplete proposals, will be named by year’s end.

“We have carefully considered each of these dealer proposals looking for the best locations and the most creative plans,” said Peter Grady, Chrysler vice president of network development and fleet operations.

“We are thrilled with their level of interest in securing the Fiat franchise and in the innovative proposals they have submitted. We’re excited to be at the point where we now can start appointing our Fiat dealer network,” Grady said.

About 400 dealers gathered in Detroit on Aug. 30 to learn more about the plans for the Fiat brand and what the automaker requires from its franchises in terms of facilities, staff, training, marketing, inventory and parts. Interested dealers had until Sept. 22 to submit a proposal.

Chrysler says it also will look at proposals from dealers outside the Chrysler network who have expressed interest in a Fiat dealership. They are unsolicited proposals that are being considered, said spokesman Ralph Kisiel. The automaker is not seeking additional proposals.

“We are looking for a customer experience that is as unique and personalized as the Fiat 500 itself,” said Laura Soave, head of Fiat Brand North America. “Some of the proposals are extremely creative, and in many cases, not only met but exceeded our expectation.”

Dealers must have a separate sales area to sell the Fiat 500 but can initially use Chrysler service bays.

The franchises are located in cities with strong, small-car registrations and potential small-car sales growth over the next five years. They represent 37 states and Puerto Rico.

Detroit is the only city in Michigan. Florida, New York and California have the most cities slated to get Fiat dealers.

Projected Fiat volumes are small. Chrysler will build about 120,000 500s annually, and half that for South America. The 500 will be followed by a 500 convertible next year, and electric and performance Abarth versions in 2012.

The Italian automaker stopped selling Fiats here in 1983 and ceased mainstream Alfa Romeo sales in 1995. Sales continue of the more exotic Ferrari and Maserati brands and the low-volume Alfa Romeo 8C sports car.

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Chrysler Says Dealers with Express Lane Service Double Oil-change Business

Chrysler Group LLC, the U.S. automaker run by Fiat SpA, said dealers who set up quick-lube services as part of the company’s push to improve customer treatment are doubling their oil-change business in one year, Bloomberg reported.

The faster service is part of the automaker’s drive to improve buyers’ experience and make the outlets more competitive with independent repair shops, said Pietro Gorlier, chief executive officer of Chrysler’s Mopar service, parts and customer care division.

Gorlier aims to increase the proportion of U.S. Chrysler dealers open on Saturdays to 80 percent by the end of next year from 68 percent now and 60 percent last year. He also wants 80 percent of the dealers to offer express service by the end of 2014, up from 22 percent.

“All of the dealers who’ve implemented an Express Lane have had incredible results,” Gorlier said in an interview. “There is a huge potential that all of the manufacturers, including Chrysler, that we’re not capturing due to the competition in the after sales.”

Chrysler dealers are outnumbered 37-to-1 by independent repair facilities, said Gorlier, who took over as Mopar’s chief in June 2009. Chrysler has 2,317 U.S. dealers.

Some dealers avoided providing services after sales because they don’t make a lot of money from oil changes, Gorlier said.

“You start with an oil change then you move to tires, to batteries, brakes” and to bigger repairs later in the life of the vehicle, he said.

Service Business

Dealers who offer Saturday service hours increased their service business by 20 percent, said Bryan Zvibleman, a Chrysler spokesman. The Express Lane Service has doubled dealers’ oil- change business in the first year, on average. They’re selling three times more tires, four times more batteries, six times more windshield wipers and seven times more air filters, he said.

The average dealer makes more money from parts and service than selling new cars because the business has higher profit margins, Stephen Spivey, a senior auto analyst at Frost & Sullivan Inc. in San Antonio, said in a telephone interview.

“People are keeping their vehicles longer, which you’ve seen over the past two, three years as the new vehicle market has sort of gone in the tank,” Spivey said. “As a function of people keeping their vehicles longer, they may be paying more attention to accessories, maintenance, things that make the vehicle look better or run better.”

Revenue Gains

Milosch’s Palace Chrysler Jeep Dodge in Lake Orion, Michigan, began opening on Saturdays about 18 months ago and started a quick oil change service a few months later.

Revenue from non-warranty work in Milosch’s parts and service shop in August rose 44 percent from a year earlier, just after the dealership opened the Express Lane Service, said Jim Gentry, Milosch’s service director. The Express Lane cut customers’ wait time in half to about 30 minutes and eliminated the need for reservations, Gentry said.

The average number of oil changes increased “instantly” and is now about 1,400 a month, up from 600, Gentry said.

“Everybody thinks dealers are expensive, that’s the reason they don’t come to us, and that we’re inconvenient,” Donald Milosch, one of the dealer’s owners, said in an interview. “With Express Lube and Saturdays, we’re trying to change that image.”

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