Fiat to Supply Small Cars to Chrysler, Brings Alfa Romeo Along

The Fiat 500 is a popular European citycar that could find its way to America through the Fiat/Chrysler partnership.

In the global automotive shakedown, vehicle manufacturers have intensified their efforts to come out ahead, if not simply survive. Companies are looking towards mergers, partnerships or other economies of scale to reach new markets or cut costs.

Fiat and Chrysler have announced a mutually beneficial partnership to roll out during the next five years and address the shortcomings of each brand. The Italian company has offered to acquire a 35% stake in the U.S. carmaker, meaning that the brand will once again have deep ties to Europe as it did when purchased by Daimler-Benz AG in 1998.

Fiat brings the experience of a fuel-efficient product portfolio and will supply Chrysler with much-needed compacts, subcompacts and city cars, while enjoying a pre-established dealer network as the tradeoff. The deal comes with no cash investments from either party, but does tap into the established facilities that each currently own, according to Automotive News.

For example, one detail from the tentative agreement is the transition of Chrysler’s Toluca, Mexico, plant from the Dodge Journey crossover and Chrysler PT Cruisers to retool for the Fiat 500—a retro-inspired European city car with an established following abroad.

Also in the deal are other small cars Chrysler needs to meet the next series of much stricter fuel-economy standards. Automotive News reports that along with the Fiat 500, Chrysler will receive another minicar based on the Fiat Panda or a rebadged derivative.

According to JATO Dynamics, the Panda has been the best-selling minicar/citycar car in Europe since 2002 with the 500 trailing close behind, much like the smart car here where it continues to sell extremely well regardless of economic conditions.

Alfa Romeo will return to U.S. shores with the 8C Competizione sports car, but could also include hatchback imports like the 147 replacement or the MiTo.

Other B segment cars include something built on the Fiat/GM SCSS platform, possibly both the Alfa Romeo MiTo and Fiat Grande Punto. They share the same platform and sell well. Alfa Romeo is developing a replacement for their 147 model compact hatchback to be released in 2009, likely dubbed the 149.

This new model will supersede the 147 and fall above the MiTo hatchback, marking a bold re-entry into the U.S. market with the 8C Competizione sports car.

Another benefit to Chrysler is obtaining access to Fiat’s range of four-cylinder engines. Currently, Chrysler’s smallest engine is a 2.5L four-cylinder from the Global Engine Manufacturing Alliance (GEMA) plant in Dundee, Michigan.

The new additions could spell an opportunity for supply synergies and shared technology for all brands—a synergy that would benefit specialty-equipment manufacturers as well, offering a small-engine range spread over a diverse field of vehicles. 

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