Fiat emerging as hip new kid on U.S. block

For some, the name “Fiat” evokes memories of touring on thin European roadways and swirling through verdant Tuscan hillsides in search of the perfect Brunello.

For more-youthful U.S. consumers, Fiat’s Italian name is barely known, making its sleek new red and white-themed dealerships — dubbed “studios” — the hippest thing going in the re-emerging U.S. auto industry, now fully in revamp mode after government bailouts two years ago.

Just last week, the Italian automaker became the majority shareholder in the very American Chrysler Group LLC. By purchasing the last stock owned by the U.S. and Canadian governments, Fiat completed the 2009 deal that staved off the collapse of one of Detroit’s iconic Big Three.

But Fiat doesn’t want to be a mere nominal owner. As a much-leaner Chrysler continues a strong recovery after shoveling much of its debt, Fiat also hopes to bring its own cars back to the U.S. after abandoning the market in the mid-1980s. Among other things, the rescue deal gave Fiat the right to distribute its cars at Chrysler, Dodge and Jeep dealerships.

“What Fiat provides Chrysler with is technology for small cars,” Rebecca Lindland, the director of automotive research for HIS Global Insight, says of the merger.

“In turn, it also provides Fiat with the opportunity to expand into some of the larger platforms,” she says of Chrysler’s reciprocal bounty. “The Fiat brand will allow consumers to buy a European product without spending $30,000, $40,000, $50,000. It offers the U.S. a nonluxury European brand besides Volkswagen.”

Fiat’s chic but affordable 500 model will get its U.S. brand launch under way soon, and the company plans to open 130 dealerships across the country in the next year in an appeal to both Euro flair and home-spun frugality.

With a base model of the new Fiat 500 starting at about $20,000 and its fully loaded Cabriolet convertible at about $24,000, the first Fiat models, which come in bright primary colors and look like a boxier VW Beetle, are positioned to go head to head with BMW’s more upscale Mini Cooper brand.

Ms. Lindland says Fiat’s North American head, Laura J. Soave, who came to the company from Volkswagen, has worked to remove safety and reliability concerns among some U.S. consumers who drove European Fiats or remember the brand from its last U.S. ventures and gave it the mocking moniker “Fix It Again, Tony.”

“Some people didn’t have a great experience in the Fiats of the past. Now it’s about showing people that the Fiat of today is not the Fiat of yesterday,” Ms. Lindland said of the U.S. marketing tactics.

Peter De Lorenzo, a Detroit-based auto analyst, noted that the “Fiat brand in the U.S. is nonexistent,” which makes it tough to predict how well Fiat’s re-entry will go.

“The people who think the Fiat 500s are cute, some will buy and others will simply say they are cute. As far as Fiat bringing a model over here en masse and expecting Americans to blindly embrace them with open arms, that’s a big supposition. I think the jury is still out,” he said.

How Fiat helps the Chrysler brand regain its fiscal health also remains unseen.

On Tuesday, new figures released showed that net revenues for Chrysler rose by 30 percent while U.S. market share also rose from 9.4 percent to 10.6 percent, according to second quarter earnings reports.

Although Chrysler has had success with its larger-platform vehicles such as the Jeep Grand Cherokee and its trucks, Mr. De Lorenzo, who pens the website autoextremist.com., said the redone Chrysler 300, touted by hometown rap star Eminem during a much-viewed Super Bowl commercial, is not selling well.

But nevertheless, he said, this is as good an opportunity as ever for Fiat/Chrysler.

“With Chrysler, they’ve got their costs down to nothing. If [Fiat CEO Sergio] Marchionne can’t make money with the table set the way it is, then nobody can.”