Fiat 500: The Littlest Bailout Baby

Chrysler is in desperate need of quick fixes. New versions of old nameplates (300, Grand Cherokee) and quick ‘n dirty refreshes, and modifications of existing, moribund nameplates are not going to keep showrooms busy while new, Fiat-based products wend their way to market over the next five years. And so, Fiat is bringing its 500 minicar to the US next year. At least that’s why Chrysler says it’s coming: to “attract a new customer to our showrooms.” Of course, that’s far from the whole story.

The challenges facing the Cinquecento’s success are even greater when you consider that Chrysler will handpick dealers to build unique showroom “salons” for the 500, in addition to hiring dedicated sales and management staff. Also, all Chrysler dealers will have to carry Chrysler, Dodge, Jeep and Ram brands by 2011, so it’s difficult to understand where the lucky metropolitan-area dealers will find room on the wall to add a Fiat logo. Let alone a possible Alfa badge in the future.

Luckily, the 500 isn’t being brought to the US because anyone inside Fiat or Chrysler thinks it’s going to sell particularly well. The only reason America is getting the 500 is because Fiat gets another five percent of Chrysler’s “equity” when it begins selling a 40 mpg vehicle, per the federal mandate. The other reason: Fiat wants to use the 500 to consolidate its strong presence in Latin America, where small, 100 hp vehicles are more accepted. The majority of 500 production at Toluca, Mexico will go to Brazil and other Latin American countries, as a halo for the Fiat brand’s success there.

Meanwhile, in the US market, the 500 will be little more than an overpriced fashion accessory. It may nibble around the edges of MINI’s niche, but it’s hard to imagine many potential MINI customers being drawn away by a smaller car with less power, especially if the price difference isn’t significant relative to the mass-market B-segment competitors.

Tellingly, even Chrysler’s optimistic sales projections show Fiat Group products making up a nearly unnoticeable percentage of US-market sales. Nobody, from Sergio Marchionne on down, cares if this car succeeds in the US except for the fashionista fanatics who will pay nearly any price for one. And they’ll get exactly what they deserve.