Fiat Mulls Building Fiat 300 In Canada

Italian automaker is still weighing whether to build cars at an Ontario Chrysler plant as the company looks at North American expansion.

TORONTO (CP) -- Fiat CEO Sergio Marchionne says the Italian automaker is still weighing whether to build cars at an Ontario Chrysler plant as the company looks at North American expansion while its traditional markets are squeezed by the European debt crisis.

Marchionne told a news conference ahead of a business speech late Thursday that the company is launching a new platform for the Fiat 300 this year and could build the car in North America.

"We're interested in seeing what we can do with the platform for the (Fiat) 300 here and in the U.S.," he said, adding that Fiat "might still" build the car at its partner Chrysler's plant in Brampton, Ont.

The man who took over the reins at Chrysler as the company struggled through a painful restructuring last year said he never wants the automaker to lose money again.

"I expect 2010 will be a much better year than we originally forecast," he said, adding that he expects U.S. vehicle sales to top 11 million this year and 12 million in 2011.

"Those are good volumes to try and build a car business on."

Marchionne said he is considering an initial public offering of the new Chrysler's shares in 2011. He added that he thinks there's enough demand in the marketplace to support IPOs at both Chrysler and General Motors, which both restructured under bankruptcy protection last year after they nearly collapsed during the recession.

However, he was less optimistic about Fiat's prospects in Europe, where a mounting debt crisis in Greece and other countries like Spain, Portugal and Ireland is making "growth in Europe a more questionable objective in 2010 and possibly '11."

"The likelihood that the contagion will affect the North American (vehicle) market is pretty limited. I'm a lot less serene when it comes to European consumption," Marchionne said.

Marchionne became Chrysler's CEO last year after Fiat reached a partnership agreement with the ailing automaker while it was still under bankruptcy protection in the U.S.

Fiat currently has a controlling 20 percent stake in Chrysler LLC and plans to raise that stake to 35 per cent.

The agreement aimed to provide Chrysler with the small vehicle technology it lacked yet was considered essential to its survival, while Fiat would get access to the North American marketplace through Chrysler's distribution system.

In April, Marchionne said he hopes the combined Chrysler-Fiat will build six million cars annually by 2014 with revenues of US$86.3 billion.

The deal raised plenty of speculation about what Fiat's involvement would mean for Chrysler's Canadian operations. Marchionne spent much of his youth in Canada, attending the University of Windsor, the University of Toronto and Osgoode Hall Law School at York University in Toronto.

In January, Marchionne hinted that Fiat would consider building vehicles for the North American market at Chrysler's plant in Brampton, northwest of Toronto.

"If we build it, it's likely it will be there. If we build it at all," Marchionne told reporters at the Detroit Auto Show.

The Brampton plant currently builds the Chrysler 300, Dodge Charger and Dodge Challenger sedans. It is running on two shifts and has about 800 workers on layoff.

Marchionne also hinted in January that if Fiat does decide to build vehicles in Brampton, it would invest in the plant's aging paint shop, which is one of the oldest Chrysler has.

Chrysler Canada employs approximately 7,500 people at assembly plants in Brampton, Windsor and a small casting plant in Toronto.

In its most recent quarter, Chrysler Group LLC slashed its net loss to US$197 million on cost cuts, manufacturing efficiency and disciplined pricing. That was far less than the staggering $3.8 billion that Chrysler lost from the time it left bankruptcy protection June 10 through the end of last year, and the company says it is a sign that its turnaround plans are starting to work.

Fiat reported a narrower first-quarter loss of euro25 million (US$34 million), compared with a loss of euro410 million last year, and forecast its auto business will be hurt this year by the elimination of cash-for-clunker programs in Europe. The improved results were due to a rise in revenues, with the auto business taking residual benefits from the slowing cash-for-clunkers programs.

More in Global