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Chrysler dealers wary of Fiat franchises


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Chrysler dealers wary of Fiat franchises

Alisa Priddle / The Detroit News

Chrysler Group LLC dealers expressed caution Tuesday about adding Fiat franchises, concerned whether they'll sell enough small cars to warrant the cost of a separate dealership.

Chrysler wants to locate 200 stand-alone Fiat dealerships in 125 mostly metropolitan markets in time for the December sale of the tiny Fiat 500. It's looking at markets with high small-car registrations and strong growth potential in the next five years.

Metro Detroit is expected to land franchises, and at least two dealers are interested.

"I have a couple Saturn stores that would fit the bill, said Carl Galeana, vice president of Van Dyke Dodge Inc. in Warren and who also has franchises in Florida and South Carolina. "We sold Saturns, so we know how to sell small cars."

But Galena expressed skepticism: "We have to see what the investment is and if it is just for the 500, it depends on volume."

Projected Fiat volumes are small. Chrysler's plant in Toluca, Mexico, will build 120,000 500s annually; half for South America. The 500 will be followed by a 500 convertible next year and electric and performance Abarth versions in 2012.

Investment in a Fiat franchise comes as Chrysler dealers are being asked to upgrade their facilities to create brand salons with new signs and electronic kiosks to better differentiate the Chrysler, Jeep, Dodge Car and Ram truck brands that the automaker wants under one roof.

Fiat SpA has a 20 percent ownership stake in Chrysler, and Sergio Marchionne, chief executive for both automakers, is working to grow their fortunes by using Chrysler's plants and dealerships to distribute Fiat brands in North America.

In the next two weeks, U.S. dealers will receive a detailed application guide for a Fiat franchise, spelling out physical and financial requirements, including separate signs and a building with a showroom, parts and service department, accessories and staff trained in Fiat sales methods and customer service.

Spokesman Ralph Kisiel said it is not contradictory to expect a separate building for Fiat while pushing for all Chrysler brands under one roof.

Fiat offers "a totally different new vehicle that requires its own separate showroom and sales team," he said. The expectation is Fiat also will attract a totally different buyer.

Bill Golling, owner of Golling Chrysler Jeep Dodge in Bloomfield Hills, also wants more information about the Fiat program.

"If it works out, I'd like to have one," Golling said.

Securing financing, however, could be a hurdle for some dealers. Golling worries about the tight timeline.

"Plans, permits and construction of a new building can take six months to a year to complete," he said.

Kisiel said Chrysler believes "there is ample time to build the necessary facilities."

A standalone dealership could cost $1 million, said Sheldon Sandler, CEO of Bel Air Partners of Skillman, N.J., which provides financial services to dealers.

"As an investment proposition, it's worrisome," Sandler said.

"It will be a real test of fortitude to take that kind of risk in this economic climate," Sandler said, especially because the Fiat 500 is not a mainstream vehicle and dealers could be sitting with mortgages for some time before the investment pays off.

Dealers who submit proposals will learn more at a meeting in Auburn Hills in early August, Kisiel said. Chrysler plans to announce the Fiat dealer network in September.

"We believe they can be successful in these markets," Kisiel said.

From The Detroit News: http://www.detnews.com/article/20100707/AUTO01/7070321/1148/auto01/Chrysler-dealers-wary-of-Fiat-franchises#ixzz0t01CE2X2

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