Fiat hopes Chrysler stake leads to U.S. comeback

Published: Wednesday, January 21, 2009 at 11:26 p.m.
Last Modified: Wednesday, January 21, 2009 at 11:26 p.m.

The joke used to be that Fiat stood for "Fix it again, Tony!" But an alliance with Chrysler and a new generation of safe and stylish cars have positioned the Italian automaker for a comeback in the U.S. after an absence of more than two decades.

Fresh from shedding its reputation for breakdowns and turning around its books, Fiat hopes the financial crisis and an environmentally conscious U.S. administration will open doors in America for its compact, cheap and fuel-efficient models.

The Turin-based automaker has been looking for a way back into the United States, particularly for its two-door 500 compact - a hit remake of its iconic model.

"I'm sure that many in America will fall in love with the Cinquecento," said Furio Santini, president of a club of 500 fans near Pesaro, on Italy's eastern coast. "A small and efficient car like that is just what they need."

Santini owned a previous version of the Cinquecento (Italian for 500) and remembers it well. "It was my first car when I was young. It was indestructible: My fellow members in the club drove all across Europe with it, and it always brought you home."

Dan Lennon, former president of Fiat America, a club for Italian car enthusiasts, said the earlier incarnation of the Cinquecento was very popular and "being able to bring the icon back is something a lot of people would be interested in."

Fiat appeared to gain a U.S. foothold Tuesday with the announcement that the company had signed an initial agreement to acquire 35 percent of Chrysler.

The no-cash deal, which could lead to the Italians taking increasing control of the struggling U.S. carmaker, would allow Chrysler to build and sell Fiat's models as well as its own small cars designed on Fiat underpinnings.

Fiat spokesman Gualberto Ranieri said the company was encouraged by good U.S. performances by competing compacts like BMW's Mini and Daimler's Smart.

"We are still talking about a niche, but you have to start somewhere, you have to gain a foothold," he said. "If this administration is serious about the environment, what might happen is that the bigger the car, the higher the taxes you'll pay, like it already is in Europe."

Fiat officials and analysts believe the economic downturn and concerns for the environment are likely to turn at least some Americans away from larger gas-guzzling vehicles.

"We all have less money, we all have habits we'll have to give up, and Americans may have to cut down on the SUVs," said Giuseppe Berta, who teaches history of economics at Milan's Bocconi University.

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