Chrysler has big plans with Fiat

AUBURN HILLS, Mich. (AP) — Chrysler hopes to make billions of dollars to repay government loans and revamp all of its cars and trucks with an ambitious plan that hinges on doubling sales in five years.

The plan, which includes spending $23 billion to overhaul or replace all its Chrysler, Dodge, Jeep and Ram models by 2014, is realistic as demand improves over the next five years, says Sergio Marchionne, Chrysler’s new CEO, who has turned around Italian automaker Fiat Group SpA.

Marchionne made his remarks after a daylong presentation of his five-year plan to save the ailing 84-year-old Chrysler. Much of the overhaul includes cost savings from combining purchasing and engineering with Fiat and using Fiat’s smaller, more fuel-efficient designs to replace aging Chrysler vehicles.

Marchionne’s Fiat, which now owns 20 percent of Chrysler with an opportunity for more, was put in charge of rescuing the automaker by the U.S. government. Chrysler emerged from bankruptcy protection in June.

Some industry analysts say the goal of selling 2.8 million vehicles globally is overly ambitious because of increasing competition. The company must also fight public perception of noisy, poor-performing vehicles, especially in midsize sedans, the biggest segment of the U.S. car market.

Sedans such as the Dodge Avenger and Chrysler Sebring, along with many other models, have flopped. Chrysler said it will update these cars to make them more comfortable and quieter, then replace them in 2012 with Fiat designs.

Marchionne says the U.S. market will expand over the next five years, pushing up the company’s sales. Chrysler also will have to regain some market share, he said.

Rebecca Lindland, an auto- industry analyst for the consulting firm IHS Global Insight, said the sales figures may be rosy assumptions.

“Everything needs to go perfectly” for the plan to work, she said. Her company’s expectations for Chrysler’s U.S. market share is nowhere near the automaker’s forecast of 13 percent by 2014, up from the current 9 percent.

The plan depends on the U.S. market’s recovering from this year’s sales of 10.5 million cars and light trucks to 14.5 million in 2014.

The company also has lowered sticker prices to boost sales and generate more cash as it fixes its struggling lineup, but it must tackle quality problems to survive. Consumer Reports recently panned most Chrysler products.

“We get it,” said Doug Betts, senior vice president of quality. “We’re not in denial related to the public record for quality for Chrysler.”

And it will be tough to win back skeptical buyers. The automaker’s sales are down sharply this year as buyers flee to other brands and a weak U.S. economy curbs demand for autos.