Chrysler's board meets for first time under Fiat

DETROIT (Reuters) - Chrysler Group's new board of directors meets this week for the first time since the automaker emerged from bankruptcy in June to start charting the course for a turnaround under Italy's Fiat SpA (FIA.MI).

The three-day meeting comes as Chrysler tries to revamp an old and gas-thirsty product lineup and win consumer trust after completing the sale of most of its assets to a company led by Fiat on June 10, ending a fast-track run through bankruptcy reorganization steered by the Obama administration.

Chrysler's new board is scheduled to hold its first formal meeting on Wednesday at the automaker's Auburn Hills, Michigan, headquarters.

Before that, directors will have two days of test drives and briefings to get acquainted with the carmaker and its Chrysler, Dodge and Jeep vehicles, spokesman Gualberto Ranieri said.

Chrysler's nine-member board -- which includes Chief Executive Sergio Marchionne and Chairman Robert Kidder -- has three directors appointed by Fiat, four by the U.S. government, one by the Canadian government and one by a United Auto Workers union-aligned healthcare trust.

Other members include Alfredo Altavilla, CEO of Fiat Powertrain Technologies; James Blanchard, a former Michigan governor; and Doug Steenland, former Northwest Airlines CEO.

"We are very hopeful that the new management team at Chrysler will be committed to the cultural change," said Ron Bloom, day-to-day head of the U.S. autos task force, who was speaking to a congressional oversight panel in Detroit.

Bloom was responding to a question about how important it would be for General Motors GM.UL and Chrysler to change their operating cultures and the government's role in that process. GM emerged from a similar sale process earlier in July.

"We are very confident that the new board will be very vigilant," Bloom said of Chrysler.

Marchionne, who also heads Fiat, took the wheel at Chrysler in June after sealing a deal for the Italian company to take a 20 percent stake in return for providing small-car technology that could nurse the U.S. automaker back to health.

The new Chrysler is faced with the challenge of breaking free from a reliance on aggressive discounting and a reputation for poor quality. It may also struggle with the aftermath of freezing product development to conserve cash.

Analysts also say new, fuel-efficient models for Chrysler will take at least two years to be ready for the market, and it faces formidable and entrenched competition in the small-car market, including Honda Motor Co (7267.T).

Until then, Chrysler must find a way to jump-start revenue in a U.S. market reeling under a four-year sales downturn that accelerated with the financial crisis in 2008.

Chrysler's U.S. sales were down 45.7 percent in the first half of 2009, a much steeper decline than the 35.1 percent drop in the U.S. light-vehicle market overall.

Marchionne said last week that Chrysler had already received Fiat platforms to produce smaller, more fuel-efficient cars -- a strength of the Italian carmaker.

During Fiat's quarterly earnings call on July 22, he declined to discuss the specifics of the board meeting but said the level of engagement by Chrysler's management team was high.

"I am very, very confident that the measures that we're putting in place will pull Chrysler out of the crisis that it found itself in. The level of and the quality of the management team is outstanding," Marchionne said.

(Additional reporting by Kevin Krolicki, editing by Matthew Lewis)