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Fiat/Chrysler merger to bring Ford Ka to US. Say Wha???

May 12, 2009

Source: Freep

Fiat and Chryslers’ merge, which is currently in the final stages of the skunkworks, will bring the Fiat 500 stateside. That leaves the 500 in a class of its own. Or does it???

Ford KaHere is the article by Mark Phelan:

Fiat’s alliance with Chrysler could pave the way for Ford Motor Co. to offer its stylish little Ka city car in the United States.

Ford has not announced any plan to sell the Ka here, but the company’s executives are enthusiastic about the small car, which is popular in Europe.

At just 142.5 inches long, the four-seat Ka is smaller than any car sold in the United States except the tiny two-seat Smart Fortwo. There’s no history of Americans buying cars that small in meaningful numbers, and that uncertainty has made Ford reluctant to bring the Ka here.

Chrysler’s deal with Fiat might remove a major roadblock from the Ka’s path to American roads, however.

The Ka shares its underpinnings with the fashionable little 500 city car Fiat will build at one of Chrysler’s North American factories.

Fiat developed the platform that underpins the 500 and Ka. It builds both cars at a plant in Poland. Chrysler has considered a city car of its own that would also use the platform. A platform, or architecture, is a set of structures and components that can be the basis for a variety of different models with unique styling and features.

The Fiat 500 and any Chrysler or Dodge model based on the platform will almost certainly be built at Chrysler’s Toluca, Mexico, plant.

There are two ways to make money building small cars: charge more or sell more.

Fiat can probably charge a premium for the chic, Italianate 500 — that is, price it like it’s a $17,000 compact Honda Civic rather than a $10,000 subcompact Nissan Versa.

A Ford, Dodge or Chrysler city car will probably have to start around $10,000, however. To turn a profit on a car that inexpensive, an automaker has to sell a lot of them. That’s a risky bet on a midget vehicle in big-car-loving America.

At the roulette wheel, you minimize risk by betting black or red. Automakers do the same thing when two or three companies build vehicles based on a single engineering program. That’s what Fiat and Ford did with the 500 and Ka in Europe.

By deciding to share a platform and build both cars in a single plant, they cut costs drastically from what they would have spent had each company developed its own car from the ground up.

Offering two very different cars — the futuristic Ka and throwback 500 — sold by two different brands and dealer networks virtually guaranteed higher sales than either company could have gotten alone.

The same could apply in North America. Building the Ka, or a Chrysler or Dodge city car alongside the 500 in Toluca would spread the fixed costs for each car over a larger production base.

The upshot is that a car that would have lost money — say, a low-priced Ka that might sell only 40,000 a year in the United States — suddenly becomes profitable. The same could go for a funky Chrysler minicar that might be the style-setting replacement for the PT Cruiser, which goes out of production this year after a long and successful run.

It’s too early to say if any of this will happen, but American fans of the Ford Ka have a more realistic reason for hope today than they did before Chrysler and Fiat joined forces.

So please, do comment!!! 🙂

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