Fiat to Invest $550 Million in Mexican Toluca Plant to Make Fuel-Efficient 500 Minicar

Fiat to Invest $550 Million in Mexican Toluca Plant to Make Fuel-Efficient 500 Minicar

By Scott Doggett February 9, 2010

A Chrysler plant outside Mexico City will begin assembling the Fiat 500 by December for sale in U.S. and Latin American showrooms, Sergio Marchionne, the chief executive of Fiat and Chrysler, said today.

The retro-inspired 500 will be many Americans' first exposure to Fiat cars and will be sold in Chrysler showrooms.

It will feature a new 1.4-liter, four-cylinder fully integrated robotized engine (meaning that it was assembled by a robot) that's supposed to be very fuel efficient, but fuel economy figures for it have not been made available.

Chrysler is struggling to rebuild trust among American consumers by revamping its aging, truck-heavy lineup through 2014, with a dozen new vehicles built on Fiat platforms.

Marchionne's plan calls for Chrysler to break even on an operating basis in 2010 and on a net basis by 2011, in part by regaining market share lost in its slide toward bankruptcy.

The $550 million Mexican investment by Chrysler will be mostly financed through a loan from Mexican development banks, Marchionne said.

"The 500 is expected to stir excitement and certainly will help us position the group in the forefront of the industry in terms of innovation and fuel efficiency," he said at the plant in the city of Toluca.

He added: "The 500 is just one example of how Fiat's experience in the small- to medium-vehicles segments and its expertise in fuel saving technologies will play a key role in Chrysler's revival."

Marchionne did not give production details but said 130,000 cars a year was a target, with sales going to both the United States and Latin America.

"I don't think we are going to shrink American's tastes by introducing the Fiat 500. We are only looking for a particular space in the market for this car to occupy," he said.

Fiat was given control of Chrysler by the Obama administration last June as part of a restructuring of the U.S. automaker in a government bankruptcy.

Scott Doggett:  is an AutoObserver.com Associate Editor.