May 182010


Fiat S.p.A. will assemble two models for Chrysler in Italy, including the next-generation Sebring mid-sized sedan, Fiat sources revealed yesterday.

Under the Italian automaker’s five-year plan, Fiat and Chrysler will manufacture more vehicles for each other than previously revealed. The manufacturing plan is part of a larger effort to weave together the companies’ product development, purchasing and other operations for maximum efficiencies of scale.

According to either announcements by Fiat and Chrysler CEO Sergio Marchionne or information from company sources:

• In 2013, Fiat will build in Turin a mid-sized sedan “that will be primarily produced and distributed for Chrysler in the U.S.,” Marchionne said. A person familiar with the matter said the car will replace the Sebring.

• In 2012, Fiat will build in Italy a new compact sedan, which will be distributed in North America under the Chrysler or Dodge brand.

• Alfa is planning a rear-drive roadster for 2013. The car could be built in Canada or Italy.

• Chrysler will build in the United States two Alfa Romeo SUVs for global sales — a compact model in 2012 and a larger model in 2014.

• Chrysler could import from Serbia new, Fiat-built subcompacts in 2013 for both the Chrysler and Dodge brands.

Marchionne wants to use existing factories as efficiently as possible.

“The allocation of production between Fiat Group Automobiles and Chrysler will be based on rationalization and efficiency so that maximum capacity utilization is achieved for both organizations and the need to establish new plants avoided,” he said.

To maximize capacity use, company sources say:

• Chrysler will build in the United States the compact SUV for Alfa along with the vehicle that will replace the Jeep Patriot and Compass crossovers.

• The large Alfa SUV and Jeep Cherokee replacement, sold as the Liberty in the United States, will share the same U.S. plant.

• The Chrysler Sebring sedan will be built in the Mirafiori plant in Turin, along with the Alfa Romeo Giulia mid-sized sedan and wagon.

• The new compact Chrysler or Dodge model will be built in Fiat’s Cassino plant in central Italy. By 2014, Cassino will build 400,000 units on the same platform, including the Alfa Romeo Giulietta, the Fiat Bravo replacement and the Lancia Delta.

Chrysler also will export seven other vehicles from North America to Europe, where they will be sold under a different brand:

• Next year, the Mexico-built Dodge Journey crossover will become a Fiat model in Europe.

• Beginning next year, five Chrysler North American-built vehicles will be sold in continental Europe with the Lancia badge. But in the United Kingdom and Ireland, the Chrysler badge will be used on all Lancias and Chryslers. Lancia withdrew from those right-hand-drive markets in 1991 because of poor sales.

• The Ram truck brand’s unibody pickup, due in 2012, will be sold in Europe under the Fiat Professional brand of light commercial vehicles.

The North American range of the Fiat brand will include four models: three variations of the 500 minicar built in Mexico — a hatchback, convertible and Abarth sporty version — and a four-door high-roof hatchback built in Turin.

Meanwhile, dealers in Europe will get Lancia versions of the following Chrysler models:

• A Canada-built new 300C large sedan in 2011.

• A Canada-built restyled Voyager large minivan in 2011. The van is sold as the Town & Country in the United States.

• A U.S.-built new compact sedan in 2012.

• A U.S.-built compact hatchback/station wagon in 2012.

• A U.S.-built large crossover, 2013.

• An Italy-built Sebring mid-sized sedan successor, 2013.

May 122010

Opel/Vauxhall is considering expanding its product offerings in China and launching in new markets such as South America, Australia South Africa, CEO Nick Reilly said.

General Motors Co.’s European unit is seeking to expand globally to offset a big decline in sales in the weak European market where Reilly expects Opel’s new car sales to fall to 1 million this year from 1.2 million last year.

Reilly ruled out exporting Opels to the United States because the brand’s cars have too much overlap with other GM cars sold in the U.S., such as the Opel Insignia-based Buick Regal.

Speaking in an interview with the Berlin Tagesspiegel daily newspaper, Reilly said: “We are considering introducing or re-introducing Opel in a series of markets.”

Dealers in South America and South Africa are asking for Opel products, Reilly said. Australia, “where Opel has a strong image,” is another possibility.

China appeal

In China, Opel could appeal to different buyers than GM’s Chevrolet and Buick brands that are already sold in the world’s largest auto market, Reilly said.

“We wouldn’t suddenly sell 200,000 cars in China,” he said, adding that the brand would have to remain a non-volume seller because it could not match the low prices that China’s buyers generally pay.

“Opel’s image in China is strong but our product range is too small,” said Reilly, who headed GM’s Asian operations before he became Opel CEO in November.

Opel would like to launch its Astra compact sedan and Insignia large sedan in China where it already sells the Corsa subcompact and and Zafira minivans. Opel sold 3,000 cars in China last year.

GM has in the past shied away from aggressively selling Opel cars in markets outside Europe because of fears that they could cannibalize sales of its other brands such as Chevrolet, Buick and Australia’s Holden, which use Opel technology.

But Reilly said that apart from the U.S., there is very little overlap in most global markets.

“Opel is not a direct rival to other GM brands, For German brands with German technology, there’s an especially high regard throughout the world,” Reilly said.

Opel has not decided whether it would use GM existing dealer channels or independent dealers if it expands more aggressively globally, he said.

May 082010

Thirteen of Buick-GMC dealer Kim Borcherding’s customers had Pontiac leases that ended in March, but none of them bought or leased another new vehicle from her.

Six of them bought an import. Three bought a Chevrolet, which Borcherding’s Cincinnati store doesn’t sell. One bought a used vehicle from her, and three bought out their leases.

Those were their only options if they wanted to stay her customers, Borcherding says. Her current inventory is “just nothing that is in their league,” she says, since the lowest priced new vehicle she has costs nearly $25,000.

Like most Pontiac owners, Borcherding’s customers need moderately priced sedans not found in the current Buick-GMC showroom.

As a result, General Motors Co.’s retention efforts are shifting most of its former Pontiac owners to Chevrolet.

“They have nowhere else to turn because we don’t have anything else to offer,” Borcherding says. “They’re not going to wait forever.”

In the year leading up to GM’s April 27, 2009, announcement that it would kill Pontiac, 37 percent of owners trading in a Pontiac bought a GM product, according to data from That percentage has stayed nearly flat at 36 percent.

But the preferred GM brand for repeat buyers has shifted. Before GM decided to eliminate Pontiac, the brand competed evenly with Chevrolet for Pontiac owners’ next purchases, with each brand averaging 15 percent. And Pontiac won that battle in the months immediately following the death sentence.

But from Jan. 1 — when GM’s supply of Pontiacs had dwindled to 800 — through March, one-fourth of Pontiac owners chose Chevrolet for their next purchase. To compare, Buick-GMC sales from Pontiac trade-ins have only increased to 10 percent this year, from 6 percent the year before the Pontiac verdict.

That’s fine with some Buick-GMC dealers who either own Chevrolet stores down the street or never depended much on Pontiac sales. But for others, the loss of Pontiac and the shift to Buick-GMC’s premium image has meant a drop in revenue. Their wait for less expensive sedans continues while Pontiac owners slowly slip away to the local Chevrolet dealer.

“None of them are buying a Buick-GMC because there’s nothing really comparable in the Buick-GMC line,” says Mark Frost, general manager of Jim Ellis Buick-GMC outside Atlanta.

The GMC Terrain small crossover, starting at $24,995, including shipping, has the lowest starting sticker price in the brands’ lineups, not counting pickups. The least-expensive car, the Buick LaCrosse, starts at $26,995, including shipping.

Dealers will have to wait until the 2012 model year to sell a less expensive sedan: the base version of the new Buick Regal. A premium-trim-level Regal is on its way to dealerships with a $26,995 price tag, and the base level will cost less than that.

Frost also manages a Chevrolet store, and 10 of the 14 Pontiac trade-ins he has seen since November have been for Chevrolets. His dealership group took over the Buick-Pontiac-GMC franchise a year ago, so it has never really depended on Pontiac sales. But he still advertises service to Pontiac owners through the updated “free agent” lists GM provides to all its dealers.

GM has also offered Pontiac owners four free oil changes and $1,000 off a new GM vehicle.

“The loyalty rates of Pontiac owners are in line with our expectations,” GM spokesman Tom Henderson says. He declined to give data on retention rates or efforts to keep Pontiac customers in the GM fold.

One dealer sees used cars as a way to retain Pontiac owners. New York dealer Mike Mullaney’s Buick-GMC store doesn’t have inexpensive new products for his Pontiac customers, so he’s trying to put them in late-model used Pontiacs. That way, he hopes he can keep from losing his customers to the local Chevrolet dealer and maybe be able to offer them a smaller, less expensive Buick in a year or two.

Says Mullaney: “If we can maintain that customer for one more product cycle, we’ll be in good shape.”

May 042010

Volkswagen AG’s Audi luxury division maintained its goal of posting higher sales and earnings this year after first-quarter profit rose by a third.

Operating profit gained 32 percent to 478 million euros ($632 million) in the first quarter, the carmaker said today in a statement. Sales climbed 23 percent to 8.3 billion euros.

“First-quarter results provide a sound basis for our goal to exceed last year’s sales and operating-profit levels,” Audi Chief Financial Officer Axel Strotbek said in the statement.

Audi has a goal of dethroning BMW AG as the world’s largest maker of luxury cars by 2015. Audi CEO Rupert Stadler reiterated a goal on March 9 of restoring deliveries this year to 1 million cars and SUVs, a 5.3 percent increase from 2009. BMW is targeting a “single-digit percentage” sales gain while Daimler AG’s Mercedes-Benz division, the No. 2 luxury-car manufacturer, aims to outpace auto-market growth of 4 percent.

The VW unit aims to introduce a dozen new models this year as part of its goal to bring the lineup to 42 vehicles by 2015. Audi will invest 7.3 billion euros on car development and plant upgrades through 2012. Audi’s deliveries in 2009 declined 5.4 percent to 949,729 cars and SUVs from 1 million in 2008.

Audi’s first-quarter operating margin increased to 5.8 percent from 5.4 percent a year earlier, Strotbek said, He reiterated the carmaker’s goal to increase sales to more than 1 million vehicles this year.

Profit at Wolfsburg-based Volkswagen, which aims to overtake Toyota Motor Corp. in deliveries and profitability by 2018, almost doubled in the first three months to 473 million euros, helped by gains at Audi and the VW namesake brand. VW group sales climbed 19 percent to 28.6 billion euros.