Fiat to create Ram brand, rush new Chrysler models

MILAN/DETROIT Wed Sep 30, 2009 8:51pm EDT

MILAN/DETROIT (Reuters) - Fiat SpA FIA.MI will rush the first all-new Chrysler model to the U.S. market by the end of 2011 and create a new Ram brand for its truck line under a revival plan for Chrysler that will be shown to the U.S. government this week, people involved in the discussions said.

Italy's Fiat, which assumed management control of Chrysler under a reorganization funded by the Obama administration, is scheduled to brief officials with the White House autos task force on plans to revamp Chrysler's vehicle line-up.

Under the plan, Fiat will create a new Ram brand for what have been Dodge-branded trucks, two people with knowledge of the matter said.

In addition, Fiat will bring its first all-new Chrysler product out by the end of 2011, compressing the normal vehicle development plan, the sources said.

That will be in addition to the Fiat 500, a subcompact that Fiat plans to introduce to the U.S. market by late 2010. More new models will roll out in 2012, one of the sources said.

Chrysler and Fiat had no comment.

Chrysler's nine-member board was briefed last week by Fiat Chief Executive Sergio Marchionne on the strategy for reviving the U.S. automaker's vehicle line-up, according to a person with knowledge of the plans.

Many analysts, suppliers and other automotive executives say Chrysler desperately needs new vehicles after emerging from bankruptcy with $10 billion in U.S. government financing.

Bank of America Merrill Lynch analyst John Murphy said in a closely watched report issued in July that Chrysler could shrink to half of its current 9 percent U.S. market share because of the slow pace of upcoming vehicle launches.

FIX IT AGAIN

Chrysler's prior owners, Cerberus Capital Management and Daimler AG, had both cut investment in new vehicle programs to conserve cash amid tumbling sales.

Partly in response, Fiat's plan for Chrysler will focus first on investment in improving vehicle interiors, an area where Chrysler has come under sharp criticism for trying to cut costs too aggressively.

Fiat will also revamp the mid-sized Chrysler Sebring and Dodge Avenger sedans, reversing an earlier plan that would have scrapped those models at the end of 2010 when a Detroit-area plant that makes the vehicles is scheduled to close.

That decision would represent a reprieve for Chrysler's Sterling Heights Assembly plant where hundreds of workers rallied last week in an effort to save some 1,200 jobs.

A trust affiliated with the United Auto Workers union owns 55 percent of Chrysler. Fiat has 20 percent but could see that share rise to 35 percent if it meets certain targets set by the White House autos task force.

Chrysler has said it will not discuss its product strategy until it unveils a five-year plan in November.

By focusing on steps to bring quick improvements to Chrysler cars, Fiat hopes to shore up sliding sales over the next two years, one of those involved in the discussions said.

The separation of the Ram truck brand will allow Fiat to make Dodge more of a performance car brand, the person said.

But the move could also make it easier for Chrysler to spin off its truck business down the road if a continuing slump forced Fiat or U.S. officials to consider such a step.

Marchionne, who was due to appear at Chrysler headquarters on Thursday, said earlier this week that part of his plan for Chrysler would involve more "universal" platforms that Fiat and Chrysler could use as the basis for a number of vehicles.

Marchionne also said there would be a future for the Dodge Avenger and Sebring under the Fiat plan.

"They have a great future. You'll love the cars," he said.

(Editing by Tim Dobbyn, Gary Hill)

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