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Automotive Traveler Magazine: 2010 11 Fiat Chrysler Integration Accelerated Page 1

Auto News: Integration of Alfa Romeo and Jeep Accelerated

Fiat-Chrysler CEO announces one-billion euro investment in historic Mirafiori plant to build C- and D-segment vehicles for Jeep and Alfa Romeo.

By AT Staff

Chrysler's future product plans have come into sharper focus with the late-November announcement in Turin that Fiat and Chrysler are planning a one-billion euro ($1.3-billion) investment in Fiat's Mirafiori plant to produce C- and D-segment sedans and SUVs for its Alfa Romeo and Jeep brands before the end of 2012. The investment, announced on 26 November by Fiat-Chrysler CEO Sergio Marchionne in a speech to four Italian unions, will ultimately boost production to 280,000 units annually. And it will require increased employment in exchange for productivity concessions from Fiat's unions to make the plant competitive, especially compared to plants in Eastern Europe.

"This is an extraordinary opportunity for Italian industry to produce cars of quality and prestige," says Marchionne. "Mirafiori has all the elements necessary to achieve a leap of quality and become a world-class plant, producing cars for Europe, North America, and other markets around the world."

Marchionne also noted that this project is the first tangible example of the benefits brought by the Chrysler alliance to Italian operations. It is significant that such a development should take place at Mirafiori, he said, as the city is the symbol of Italy's industrial and automotive culture.

The announcement is a clear indication that Marchionne is working quickly to align the future product plans for Alfa Romeo and Jeep--in much the same way he has already done with Lancia and Chrysler.

The vehicles planned for production in Fiat's Mirafiori plant will be based on Fiat's flexible "Compact Wide" (known internally as C-wide) architecture. The C-wide platform is currently used on the recently introduced Alfa Romeo Giulietta sedan; it will also underpin an upcoming Dodge model to be built in North America. One version promises to deliver 40 miles per gallon, one of the conditions for Fiat to expand its ownership of Chrysler by another 5 percent.

(The other two requirements are building Fiat's 1.4-liter engine in Dundee, Michigan--for use initially in the Fiat 500 built in Mexico--and expanding Chrysler's North American vehicle exports, which could raise Fiat's stake in Chrysler to 35 percent by mid-2013.)

The Mirafiori plant is slated to build a number of models based on Fiat's C-wide architecture, including a crossover SUV intended to replace the Compass/Patriot in the current Jeep-model hierarchy. This move was broadly hinted at when Chrysler laid out its five-year plan to the media in December 2009.

As a companion to the Compass/Patriot replacement, Mirafiori is expected to produce a true crossover-style SUV for Alfa Romeo. This is not to be confused with a second Alfa Romeo SUV rumored to be in the works--which is based on the new Jeep Grand Cherokee built on the unitized platform shared with the Dodge Durango and constructed at Chrysler's Jefferson North facility in Detroit.

The Mirafiori-built Alfa Romeo SUV is expected to be more car-like and biased more towards on-road comfort and performance. Meanwhile, the Jeep version will retain Jeep's off-road capabilities.

The flexible platform will also spawn a premium, near-luxury, sedan version for Alfa Romeo. The Giulia will be competing with the likes of the BMW 3 Series and Mercedes-Benz C-Class sedans. Thankfully, no sedan version is expected to wear Jeep's seven-slot grille. Yet another variation of this platform, stretched in length, is expected to replace the Chrysler 200 and Dodge Avenger at some point in 2013 as well. It will also be built in North America.

The trade publication Automotive News reports that the Mirafiori plant will also produce the upcoming D-segment, mid-sized Giulia sedan and station wagon. The Alfa Romeo-branded SUV will be aimed at the Audi Q5, the BMW X3, and the Mercedes-Benz GLK, while the Jeep version competes against such models as the Ford Escape, the Honda CR-V, and the Toyota RAV-4. Fiat and Chrysler will need to ensure that the Compass/Patriot replacement is price-competitive in the North American market, given that it would have to sell for less than $20,000.

Fiat and Chrysler will share the investment in the required updates to the Mirafiori facility based on the expected output when the platforms are fully merged. This means that Fiat will cover about 60 percent of the cost, or 600 million euros, as it will take 150,000 Alfa Romeos and Fiats each year. Chrysler will contribute 400 million euros, as it will take 100,000 of the replacement for the Compass/Patriot, slated to halt production at the end of 2012.

With Marchionne's announcement, we're seeing tangible examples of the continuing integration of Fiat and Chrysler automotive operations, plans that have been moving forward since Chrysler's emergence from bankruptcy in 2009.

When speaking with executives from both sides of the alliance earlier this month in San Francisco, we sensed a far greater cooperation between Fiat and Chrysler than was present between Daimler and Chrysler during its ill-fated 1999 "merger of equals."

With the current euro/dollar exchange rate pegged at approximately €1.00=$1.30, the road ahead could offer some challenges. The plan is ambitious, and we look forward to seeing how it plays out over the next 24 months.