Chrysler's Fiat/Alfa Dealer Plan: 50k Sales From 165 Stores In 119 Markets

Edward Niedermeyer
by Edward Niedermeyer

Chrysler execs met with some 400 potential Fiat dealers today to discuss plans for a new network of Fiat and Alfa-Rome brand stores in the US, and as we have noted, a certain amount of overlap can be expected. Chrysler says that “as many as 200” stores could be opened for the Italian brands, but the company has only identified 119 metropolitan markets in 38 US states where it projects sales growth in small car sales. Even with only “about 165” stores planned for the initial rollout, quite a few markets could host dueling Fiat/Alfa stores. According to the NYT’s Nick Bunkley, Idaho, Iowa, Alaska, Mississippi, Montana, New Hampshire, South Carolina, The Dakotas, Vermont, West Virginia and Wyoming will not receive Fiat/Alfa dealerships. Meanwhile, the AFP reports that Chrysler plans to sell 50,000 Fiat 500s in 2011 alone, meaning each of the 165 stores will sell an average of 303 units per year.

Previously we had heard reports that as many as four Fiat dealers are planned in the Phoenix, AZ area alone, and based on this latest information, most good-sized markets should expect at least one rival Fiat store. Initially these dealers will be competing on a single product, the Fiat 500 subcompact, but eventually Fiat dealers will receive several bodystyles of 500 including convertible, Abarth (high performance) and EV versions. By 2012, Fiat dealers will also begin selling Alfa-Romeos, starting with the midsize Guilia sedan and wagon, and eventually including two crossover/SUVs, the MiTo hot hatch, and possibly more. Until those products arrive though, Fiat dealers will face a tough time competing against rivals in the same market. And with plans to expand to “up to 200” total Fiat/Alfa stores, surviving the initial competition is no guarantee of survival.

Sales of the regular Fiat 500 will begin towards the end of this year, with a convertible version following next year. On the strength of these two models alone, Chrysler hopes to sell 50k Fiats in the US next year from its brand-new dealer net. With an average of 303 annual sales per store, one has to assume that dealers will be charging a pretty penny for the Mexican-built subcompacts. After all, dealer startup costs are estimated to be as low as $250,000 and as high as $1m, depending largely on land prices. Chrysler insists that dealers at least have a separate showroom for the Italian brands ready for launch, and they must have plans for a standalone building down the road.

One Chrysler dealer tells the DetN

you have to look at the long-term strategy to turn it into profit, but it doesn’t concern me. If you are not a bit liquid, you shouldn’t be in the game. This is a very liquid business

With 300 annual units of initial volume per store and the possibility for inter-dealer competition in some markets, he’s right that the short-term returns won’t be fantastic. Then again, the long term picture is hardly clear either, as fuel prices, future product, pricing, dealer locations, and the sustainability of public interest in the subcompact hatchback are all open questions. Other issues include the viability of the Fiat brand in a market it previously abandoned in shame, the long-term health of the Alfa brand, and Chrysler/Fiat’s seeming overabundance of automotive brands (particularly as Alfa broadens the range of Italian offerings). And given that MINI and Smart stores are hardly industry-beating profit centers, potential dealers have every right to be nervous. Which might be why Chrysler has conspicuously posted videos of enthused dealers spouting PR-approved excitement. Because hype conquers all.

Edward Niedermeyer
Edward Niedermeyer

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  • Jkross22 Jkross22 on Aug 31, 2010

    I hope that this works for Fiat, but I don't have much confidence that it will. MINI worked because it was attached to BMW, had the engineering chops to deliver, had the marketing and dealership support to make it work, invested the money in advertising and so on. I don't believe reliability will hurt Fiat.. I think it's attachment to Chrysler dealerships will. Chrysler will be selling a premium product attached to a dealership that doesn't know how to sell to that demographic.

  • George70steven George70steven on Nov 24, 2010

    One idea is for them to market themselves as the affordable Prada of small cars. This would take a smart ad campaign and alot of luck. I don’t know for certain but certainly markets that have a strong subcompact market showing is definitely one piece of the decision pie. car insurance quote

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