Marchionne may start Chrysler reign cutting models

By Jo Winterbottom

MILAN (Reuters) - Chief Executive Sergio Marchionne's immediate product plans for Chrysler could be limited to weeding out weaker models and tweaking prices as he gears up to launch new designs in about two years' time.

Marchionne, who also heads Fiat (FIA.MI), took the wheel at the struggling U.S. car maker in June after sealing a deal for the Italian company to take a 20 percent stake in return for getting Chrysler CBS.UL back to health with the help of its technology.

He said on Friday he hoped to have "at least a roadmap from a product standpoint" in 14 days, and on Wednesday said he wanted to decide what to do with Chrysler's Dodge and Fiat's Alfa Romeo brands by the end of this month.

"Marchionne might have to make some very tough decisions about which models to kill" in the short-term, said Adam Jonas, autos analyst at Morgan Stanley. "He should talk to his surviving dealers.

For Chrysler, America is its most important market, with only 12 percent of sales this year expected to come from outside the U.S., Mexico and Canada.

Its Chrysler, Dodge and Jeep brands are well-known but well-worn and it acknowledged in its February restructuring plan that it had to improve quality and fuel efficiency for vehicles as well as "establish a more customer-relevant portfolio."

"Chrysler models are old and they have little appeal on the market," said Giuseppe Berta, professor of contemporary history at Milan's Bocconi University.

"Marchionne has to work out over the summer a bridge solution which will allow him to get to 2011," he said.

Analysts say new models for Chrysler will take at least two years to be ready for the market.

Models which could go in the short-term include the Chrysler Sebring and PT Cruiser, the Jeep Compass and Patriot, while the Dodge Caliber could be either scrapped or re-engineered.

Chrysler is likely to sell under 1 million vehicles in the United States this year, Berta said, compared with just over 2 million in 2007, before the global credit crunch really put the brakes on demand.

Its efforts to rustle up buyers are hampered by an old line-up and its own financial problems which triggered a cutback in its distribution outlets and damaged confidence.

"As Chrysler is at the moment, it's completely at a standstill. It needs a push," said Berta.

CINQUECENTO VS MINI

Fiat, for its part, expects to produce its Cinquecento city car -- a rival to the Mini -- in the United States from 2011, and use Chrysler's dealer network to sell the car. It could also sell its Alfa Romeo MiTo model and a new Milano model which will be unveiled next March.