Chrysler will be Fiat on inside

The Jeep Grand Cherokee is being redesigned for 2010. Photo / Supplied

Chrysler Group aims to boost global sales with a range of new vehicles its international sales chief Mike Manley says will be "American on the outside with a lot of Fiat on the inside".

Fiat and Chrysler chief executive Sergio Marchionne and his executives have unveiled a two-pronged business plan for the next five years aimed at breathing new life into the American car-maker which, until Fiat cut a deal with bankrupt Chrysler's administrators, had been surviving on a US Government bailout.

Chrysler's dismal US sales in October - down 30 per cent, for a 22nd straight month of decline - underscored the urgency to improve the group's vehicles.

"There is no 'business as usual' at Chrysler," said company chairman Bob Kidder. "There is an incredible commitment and energy for change."

The US car-maker will rework many current vehicles next year while working on new vehicles with Fiat powertrains and platforms for the following few years.

Chrysler expects the strategy to improve sales outside North America to 500,000 units by 2014 from an estimated 144,000 this year. That number would account for 18 per cent of total sales, up from a forecast 11 per cent this year, and include vehicles produced by Chrysler that will be sold under one of the brands of its Italian partner.

"Chrysler products will cover two-thirds of global market segments, doubling the segment coverage it has today," said Manley.

The car-maker will align its engineering arm to the Fiat Group, making the most of common platforms, systems and components between the two companies.

The first important new product - a redesigned Jeep Grand Cherokee - is due in the second quarter of 2010. Fiat-based products aren't expected until 2011.

By 2014, the Chrysler, Jeep and Dodge nameplates will share three platforms with Fiat, increasing Chrysler's average models per platform from about two in 2010 to three in 2014.

During that period, average volume per platform will increase to 305,000 units from 125,000.

The company's strong Jeep brand will use Fiat-supplied platforms starting in 2013, Manley said. Jeep, for example, will eliminate the Patriot and Compass crossovers after 2012 and replace them with a single vehicle whose platform will come from Fiat.

And starting in 2013, the Cherokee will have a Fiat platform.

The Wrangler also will have a big change in 2011, Manley said.

Chrysler Group is aiming for global sales of the Jeep brand to reach 800,000 by 2014, against 497,000 in 2008, under a new advertising slogan: "i live. i ride. i am. Jeep."

The Dodge brand will pursue a new lifestyle mission, playing down its traditional pitch to performance-minded males.

Production of the brawny V10-powered Dodge Viper will end in about eight months, and an unnamed sports car will be added in 2012. Dodge will introduce a rival to the Ford Focus, based on a Fiat platform, with a Fiat-based replacement for the Avenger sedan and a rebadged small Fiat.

But the Chrysler Group's larger challenge in the coming years is to meet the US federal fuel economy standard of 7.9 litres/100km (35.5mpg) for the 2016 model year.

That's where Fiat engines and powertrains come in. Chrysler will use a Fiat diesel engine and a 1.4-litre four-cylinder. The inline-four will appear first in the US version of the Fiat 500 towards the end of next year.

The biggest issue facing Chrysler, say analysts, is how quickly it turns around new products.

When New York private-equity firm Cerberus Capital Management took majority ownership of Chrysler from Daimler in August 2007, Chrysler's US market share stood at 11.4 per cent. At the end of last month, its share had fallen to 9 per cent.

The Chrysler brand was down 36 per cent, Dodge 26 per cent, and Jeep, widely regarded as Chrysler's most valuable asset, 37 per cent.

Marchionne has predicted that Chrysler could return to profitability by 2011 and has said Chrysler could break even holding a 9 per cent market share in a 10 million-unit market.

Marchionne's sales target is not outrageous to him. He is used to making bold promises and then pushing himself and his team until the doubters have to become believers.

In November 2006, Marchionne gathered 250 financial analysts and investors in Turin to present a five-year plan for Fiat's then-ailing automotive division.

Marchionne promised Fiat would start producing a net profit of US$15 million ($20.8 million) a day by 2010, up from the US$6.5 million it was losing daily when he took over in June 2004.

After the presentation many industry watchers were sceptical.

But Marchionne delivered more than promised in 2006 and 2007. Even the 2008 goal looked attainable before the global economic collapse put Fiat's 2010 targets out of reach.

Despite Marchionne's dramatic turnaround of Fiat, analysts are not sure he can do the same for Chrysler.

While superficially there may appear to be some similarities - a damaged brand, a product shortage - there are also some vast differences between the two car-makers.

Analysts note that even when it was sick, Fiat still had a huge share in its home market, something Chrysler lacks.

Additional reporting: Agencies