Image: Geneva Motor Show
Martial Trezzini  /  AP
Visitors gather at the Lancia booth during this year’s Geneva Motor Show. Chrysler is using the show to display the vehicles they it is developing with Fiat as both automakers blend their operations with jointly-developed products.
Image: Paul A. Eisenstein, contributor
By contributor
updated 3/10/2011 9:12:26 AM ET 2011-03-10T14:12:26

Visitors to this week’s 2011 Geneva Motor Show are getting their first glimpse of the all-new Thema, the long-awaited replacement for the Lancia brand’s flagship sedan.

The look is bold and elegant, but there’s something about it that doesn’t quite fit in with the rest of the line-up for Fiat’s long-struggling mid-luxury brand. That’s not surprising, since the Thema, minus the Lancia badge, is also making its debut in the United States as the new Chrysler 300.

This year’s Geneva show highlights the dramatic global restructuring Chrysler and Fiat are undertaking, as they begin to blend their operations with jointly-developed products sold under both of their various brand names. It’s a vital step for both makers, but if either gets it wrong it could consign both Chrysler and Fiat to oblivion.

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After Chrysler emerged from Chapter 11 bankruptcy protection in June 2010 under the guidance of Italian automaker Fiat — the only automaker that appeared interested in saving the Detroit manufacturer — its future still appeared uncertain.

Indeed, going into the 2011 model-year conventional wisdom held that Chrysler had little in the way of new product to brag about. However, the automaker has won praise for the all-new version of the 300 sedan, which will reach showrooms in the coming weeks, and the 200 sedan has received unexpectedly positive reviews.

Then there’s the Fiat 500, the microcar Chrysler’s Italian parent is shortly to launch in the U.S. Known in Europe as the “Cinquecento,” the car will be one of the smallest on U.S. highways and a distinct alternative to the big trucks, SUVs and crossovers Chrysler is best known for.

Speaking at the Geneva show, Sergio Marchionne, who serves as CEO for both Chrysler and Fiat, suggested that the new Chrysler 300 sedan “combines the best of both worlds,” and could appeal to car buyers on both sides of the Atlantic.

Marchionne hopes the same is true for a number of other new products.

At Geneva the Fiat stands were filled with Chrysler products that will soon be wearing European nameplates, like the new Fiat Freemont, a rebadged version of the Dodge Journey crossover vehicle. The Lancia stand, meanwhile, featured both the Journey, a version of the Chrysler Town & Country minivan, and the Flavia, a concept vehicle based on Chrysler’s new 200.

Still more models are coming, including a Maserati sport-utility vehicle based on the 2011 Jeep Grand Cherokee.

That’s a big switch from the approach Chrysler took two decades ago, when it joined forces with the Italian luxury car manufacturer Maserati to develop the TC by Maserati, a poorly-reviewed luxury sports coupe that was quickly pulled from the market.

Chrysler and its new trans-Atlantic partner Fiat have to hope that their new global offerings fare better this time around, stresses automotive analyst Joe Phillippi of AutoTrends Consulting.

“Without a doubt,” if the strategy doesn’t work, he warned, it will raise serious questions about the future of both Fiat and Chrysler.

Fiat emerged as the white knight for Chrysler when the U.S. automaker plunged into bankruptcy in 2009. The U.S. government agreed to give the Italian automaker a 20 percent stake in Chrysler as part of a multi-billion-dollar bailout plan. Fiat was also given a series of goals to meet that could eventually increase its stake to 35 percent. Those tasks include improving Chrysler’s corporate average fuel economy and increasing its sales overseas, where it has long lagged its Detroit competitors.

Story: After recall debacle, Toyota outlines a new global vision

But there’s another potential payoff for Fiat. Marchionne is convinced that, as global competition heats up, mainstream manufacturers must sell at least three million vehicles annually to achieve the necessary economies of scale. In fact, during the recent Detroit auto show, Marchionne suggested he “might have to revise that figure” to something closer to five million.

To get there, however, Marchionne is taking his lead from competitors like Toyota, Honda and Ford.

Japanese automakers have traditionally focused on developing global products that can be sold in a variety of markets around the world with only minimal changes made to reflect local tastes and regulations.

Ford has adopted that strategy with products like the new Focus, which will share 80 percent of its components between the U.S. and European markets.

At first glance, Chrysler is following the same strategy with the Freemont, Thema and Voyager models. There are subtle differences, such as the side marker lights required by European regulators, and more notably, an assortment of engines, such as the 3.0-liter turbodiesel offered on the Lancia Thema, designed to cater to the demands of fuel-conscious drivers.

The strategy will ultimately work for both automakers. Chrysler and Fiat product development teams are already working on an assortment of projects that will bring European products to the American carmaker’s line-up, including a Fiat-based replacement for the 200 sedan.

The Italian automaker recently re-launched its own distribution network in the States, choosing that route to sell the distinctive Fiat 500 microcar. But going forward, most of the jointly-developed products will appear in the U.S. under Chrysler or Dodge — and possibly Jeep — badges.

The timing of the launch could prove critical if the current run-up in fuel prices continues. No Detroit automaker is more dependent on selling fuel-hungry trucks than Chrysler. With federal mileage standards heading to 35.5 mpg by 2016 — and possibly 62 mpg by 2025 — the long-troubled U.S. carmaker will need an assortment of smaller products that it likely couldn’t afford to develop on its own, said analyst Phillippi.

Fiat, meanwhile, needs to expand its offerings in other markets.

The Thema, for example, Lancia’s flagship sedan, was originally developed as a joint venture with Fiat’s partners, including Saab. However, the model has been out of production since 1994, and Fiat has been unable to pull together a replacement on its own.

Will Europeans accept American vehicles, whatever badge they carry? Initial reviews of what some have dubbed “Chrysliats” and “Lanchlers” have been mixed. It will take some aggressive marketing to make the strategy work, European observers warn.

Fiat will be pressing hard to convince American consumers to buy its products too. The automaker’s advertising budget, an estimated $1.72 billion last year, will be bumped to $2.9 billion in 2011, according to the Detroit News.

“They have a heck of a lot of work” ahead, notes analyst Phillippi, adding that it will require brand building for both Fiat and Chrysler to convince skeptical buyers to purchase their new global offerings.

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Explainer: Ten leaps forward in car technology

  • Image: Three-point seatbelt
    Volvo’s Nils Bohlin invented the three-point seatbelt in 1959.

    English physicist, mathematician and astronomer Sir Isaac Newton once famously wrote — with perhaps a touch of false modesty — that “If I have seen a little further it is by standing on the shoulders of giants.”

    Thus has the car industry incrementally improved from its primordial horseless carriage beginnings to the magic carpet ride of today’s almost incomprehensibly complex machines with their raft of safety, environmental and convenience devices adding to the basic transportation function.

    Here are 10 of the car industry’s most important technological changes.

  • 1886 Benz

    Daimler AG

    It all began with Karl Benz and his construction of a self-propelled, three-wheel vehicle powered by a single-cylinder 0.75-horsepower engine using a leather belt and two bicycle chains to transmit power to the rear wheels.

    However modest this beginning, with its exposed engine parts and whirling bits menacing anyone who examines it too closely, the 1886 Benz launched the industry and was the foundation of today esteemed Mercedes-Benz brand. (Maybe the leather upholstery was an early clue to the company’s luxury intent?)

  • 1912 Cadillac with electric starter


    The electric starter — invented by Charles Kettering at his Dayton Engineering Laboratories Co. (Delco) in 1911 — became standard equipment on Cadillacs in 1912, paving the way for all cars to feature electric starters. This accelerated the industry standardization of gasoline internal combustion engines over steam and electric designs. It also put more women behind the wheels of cars because prior to the electric starter they tended to avoid using difficult-to-start, hand-cranked cars.

  • 1914 Ford Model T

    Ford  /  Wieck

    Introduced in 1908, the Model T was just another low-end car from the multitude of regional manufacturers in this country. In 1914 Ford separated itself from its rivals and became (for a while) the world’s largest industrial concern as the result of the Model T’s assembly switching from small teams of craftsmen assembling each car to a moving assembly line of unskilled workers each contributing the same small bit to every car on the line. Construction time to build each car plunged from 12 hours and 30 minutes to 93 minutes, and the car’s price fell from $690 to $360, while annual sales mushroomed almost ten-fold and Ford doubled workers’ salaries to $5 a day.

  • 1930 Motorola car radio


    Next time a boom car rattles your windows at a stop light, think back to the days before Paul and Joseph Galvin developed the first commercially available car radio in 1930.

    The Motorola car radio overcame a host of challenges, including electrical interference, finding space in the car for the bulky radio components and making the radio durable enough to survive the pounding of primitive roads. The popular 5T71 radio debuted at the Radio Manufacturers Association convention in Atlantic City, N.J., following a demonstration drive from Chicago to prove its durability.

  • 1940 Oldsmobile Hydra-Matic transmission


    Today few new cars are sold in the U.S. with a manual transmission and a dwindling portion of the population even knows how to use one. We can credit this dismal state of affairs to the invention of the automatic transmission and its debut in the 1940 Oldsmobile.

    The original Hydra-Matic automatic transmission offered benefits in terms of efficiency that surpassed subsequent designs, but that approach was abandoned in pursuit of smoother gear changes, which were more important to drivers. The company touted the ability to navigate stop and go traffic and to park without stalling the engine as the automatic’s primary benefits, and those features continue to drive the technology’s appeal today.

  • 1946 Michelin radial tire


    Until Michelin developed the radial, tire design had evolved little from the dawn of the car industry. The radial moniker refers to the direction of the reinforcing belts, which are turned perpendicular rather than running parallel to the direction of travel as in bias-ply designs.

    The benefits include a more stable footprint, reduced fuel consumption, longer tread life and better handling. The near-absence of any kind of maintenance or attention required led the government to mandate tire pressure monitors in cars because drivers had long since stopped checking the condition of their tires.

  • 1959 Volvo three-point seat belt


    Volvo engineer Nils Bohlin invented the three-point seatbelt in 1959. The belt appeared in the automaker’s cars that year, and within a decade the belts were mandatory equipment in all cars sold in the United States.

    Bohlin’s background was in aviation, where he developed ejection seats, so he understood the necessity of securing the torso and not just the pelvis as the lap belt had done. The elegant simplicity of his solution is confirmed by the inability of newer seat belt designs to displace the three-point seatbelt 50 years on.

  • 1972 General Motors air bag


    While air bags didn’t become commonplace in cars until the 1990s, GM conducted a large field test of 1,000 1972 Chevrolet Impalas equipped with experimental air bags. Between 1974 and 1976, the company offered the world’s first production air bags in its cars, with the first appearing in a 1974 Oldsmobile Toronado. Though the company was prepared to build 100,000 air bag-equipped cars a year, only 10,321 were sold over three years despite a reasonable price of between $180 and $300 for the option.

    The Insurance Institute for Highway Safety confirmed the robust construction of the early system by testing two of the old cars in the 1990s. Neither car ran and even the radio and clock didn’t work in one, but the air bags still deployed perfectly in the institute’s crash lab.

    “What’s important to remember at this point is that the air bags GM put into those early cars worked fine,” wrote IIHS president Brian O’Neill in a 1993 letter to the New York Times.

  • 1995 BMW and Mercedes-Benz electronic stability control

    Mercedes-Benz USA

    These premium carmakers battled to be the first to introduce an electronic stability control system that automatically stabilizes a car in the event of a slide. Though these expensive V-12 models were the first to feature stability control, they quickly verified the technology’s value with significant reductions in crashes. Subsequent studies showed that stability control-equipped cars are about one-third less likely to suffer a fatal crash, a result that encouraged the U.S. government to mandate stability control for all cars starting in model year 2012. The real safety advantage of stability control is that in contrast to seat belts and air bags, which mitigate the damage that occurs in a crash, stability control prevents many crashes from happening in the first place.

  • 1996 OnStar telematics

    GM  /  Wieck

    In our increasingly connected wireless world, the notion that the car should connect to a network over which it can share information may seem like an obvious development. But it was less obvious in 1996 when GM’s OnStar division was launched, using analog cellular telephone technology to send information to drivers and to automatically report crashes.

    Today other carmakers have their own telematics services and each month OnStar is now responding to 2,300 crashes, 10,000 requests for emergency assistance and nearly 30,000 requests for roadside assistance.


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