Chrysler halts engine output due to sluggish U.S. sales of the Fiat 500

Article by Christian Andrei, on November 16, 2011

Chrysler Group has halted production of the 1.4-liter engine this month due to the sluggish U.S. sales of the Fiat 500, the subcompact that the engine runs, Tom Zimmerman, the plant's unit chairman for UAW Local 723, revealed. At least 100 of around 400 hourly workers at the company's Global Engine Manufacturing Alliance Plant in Dundee, Mich., were laid off earlier this month.

Zimmerman further stated that there is still no information as to when the employees could get their jobs back. Spokesperson Jodi Tinson for Chrysler said that the plant "is moderating its schedule to adjust for the current bank of engines."

She contested Zimmerman's statistics, however, stating that around 30 employees at the plant are currently laid off while another 35 are "redeployed" to other parts of the facility. Internal Chrysler documents dated November 1, which Automotive News had obtained, reveal that the company has a 184-day supply of Fiat 500 coupes and cabrios available to dealers, some of whom had sold as few as 49 units from the launch in March and October 31.

Other dealers have sold as many as 370 units. Tinson further disclosed that the company had a 140-day supply at the end of October, adding that it is "very pleased" with the progress made with the launch of the Fiat brand in North America.

Based on the initial sales figures, the vehicle's strongest U.S. markets so far are in California and the Southeast, while the weakest regional markets are in the Midwest. The return of Fiat to the North American market after almost 30 years has been sluggish and consistently behind schedule.

The first dealers of the brand were delayed for several months as they secured local approvals to erect compulsory stand-alone stores. These dealers bid for the rights to sell the 500 and subsequent Fiat and potentially, the Alfa Romeo vehicles. The first dealerships of the brand did not open until March. Currently, there are 130 stores.

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