MILAN/DETROIT - Fiat SpA's plans for Chrysler will scrap the U.S. automaker's long-held plans for its brands outside North America with the exception of Jeep, people with direct knowledge of the plan said.
Fiat Chief Executive Sergio Marchionne is set to brief analysts and reporters on Wednesday on plans that the Italian automaker has been developing for Chrysler after taking management control as part of a restructuring arranged and funded by the Obama administration.
A Chrysler spokeswoman declined to comment on the pending product announcements. It will be comprehensive, the Chrysler spokeswoman said of the briefing scheduled to include Marchionne and Chrysler Chairman Bob Kidder.
The centerpiece of the five-hour presentation by Fiat and Chrysler executives will focus on plans to bring new fuel-efficient models to the U.S. market using Fiat-developed engine technology, according to the sources, who asked not to be named ahead of the formal announcement.
That will include plans to introduce Fiat's fuel-saving MultiAir engine technology to Chrysler vehicles, the sources said. [ID:nLT503133]
Fiat was given a 20-percent stake in Chrysler by the U.S. Treasury's autos task force in exchange for bringing more advanced vehicle technology to the U.S. automaker as part of an effort to allow it to meet tough new U.S. fuel economy standards.
Other elements of the Fiat plans for Chrysler will reflect a recognition that the automaker cannot be made viable with only minor changes to its past strategy for its three brands, Chrysler, Jeep and Dodge, the sources said.
As part of the wholesale shake-up under Fiat, Jeep will remain an international brand because of the strong name recognition it commands, the people said.
Fiat plans to develop the Jeep brand and beef up marketing for its iconic SUVs in emerging markets such as Brazil, one of the sources said.
Chrysler's pickup truck line-up has been rebadged as Ram, leaving its Dodge brand as a niche offering.
One of the elements of this week's product plans will be discussion of bringing an electric car to the Dodge brand, one of those with knowledge of the plans said.
The Chrysler brand will be integrated into Fiat's own Lancia brand with shared vehicle platforms. As part of that effort, an attempt to build Chrysler up as a separate brand outside North America will be abandoned, the sources said.
That would mark a reversal of strategy for Chrysler that began under its ownership by Daimler AG (DAIGn.DE). In recent years, Chrysler has drawn about 90 percent of its sales from North America, making it more vulnerable than its larger rivals to the steep, four-year decline in the U.S. car market.
Fiat is not expected to announce plans to spare Chrysler plants already scheduled to close, the sources said.
That would represent a setback for the United Auto Workers union, which owns 55 percent of Chrysler through its health- care trust fund. The UAW has been lobbying Fiat to keep a Chrysler assembly plant near Detroit and an engine plant in Wisconsin running.
Marchionne has repeatedly said the industry needs to reduce capacity to cope with lower demand.
Other elements of Fiat's plans for Chrysler point to the ways that the Italian automaker has found to reduce shared costs, the sources said.
In one of those cost-saving measures, Fiat will take over development of the rear-wheel-drive platform that would have provided the underpinnings for a new Chrysler 300C, the sources said.
By taking over the new version of the platform known internally in Chrysler as the LX, Fiat will be able to save several hundred million dollars by scrapping its own parallel development effort, one of the sources said.
The new shared platform will be used for the Lancia Thesis model, the sources said, which will broaden the Italian brand's product range.
Fiat's Alfa Romeo brand will also take a Chrysler SUV platform, the sources said.
Chrysler's U.S. sales have dropped 40 percent through September, compared with a 27 percent decline in the overall market.
Unlike General Motors Co [GM.UL], which emerged from its own U.S. government-funded bankruptcy after Chrysler, Fiat has been largely silent until now about its plans for revamping Chrysler's aging and truck-heavy vehicle line-up.
Under Chrysler's former owner Cerberus Capital Management, the automaker had suspended much of its vehicle development work to conserve cash. (Additional reporting by Gianni Montani in Turin; Editing by Maureen Bavdek)