MILAN -- Fiat S.p.A., the automaker that controls Chrysler, ended Paolo Mazzali's American dream. The car dealer near Milan spent the last 10 years selling customers "American lifestyle" as embodied in Chrysler cars and minivans. Now, he'll need to convince them to buy Italian after Fiat's decision to convert Chrysler dealers to Lancia.
"We used to sell an emotional American brand, as American as a Harley Davidson motorcycle," said Mazzali, whose company owns three Chrysler showrooms. "It's like giving up a piece of your heart to pitch something new."
Sergio Marchionne, CEO of Fiat and Chrysler, ceased sales of the U.S. brand in continental Europe Tuesday after four decades. The combination of Chrysler and Lancia is part of his plan to end losses in Europe and cut costs by 1.5 billion euros ($2.2 billion) by 2014.
Under Fiat, Chrysler's sales slumped to about a quarter of their total with Daimler AG. "We couldn't maintain the two brands everywhere so we had to decide," Olivier Francois, the Fiat executive who heads the Lancia and Chrysler brands, said in an interview "Lancia has a higher awareness in Europe, while for the U.S. and the rest of the world, Chrysler is a more global brand."
The automaker will consolidate Chrysler Group's results starting this month, a sign of the rapid integration of the two carmakers since the U.S.-based manufacturer exited bankruptcy in June 2009.
Fiat, which was initially granted a 20 percent stake by the U.S. government, aims to acquire 57 percent of the third-biggest U.S. automaker by the end of 2011.
Europe is a weak link for Fiat, where it struggles to compete with Volkswagen AG and PSA/Peugeot-Citroen SA.
The company, which doesn't breakdown results by region, lost about 1 billion euros last year on its home continent, according to Max Warburton, a London-based analyst at Sanford C. Bernstein. "Fiat is unlikely to ever make Europe profitable," said Warburton.
"There's little new product. In the next two years, market share will likely slide further." Fiat's deliveries in Europe fell 17 percent in the first fourth months of 2011, while industry-wide sales slipped 2.4 percent and VW rose 5.3 percent.
General Motors Co., which is expanding the Chevrolet brand in Europe, increased sales 2.1 percent in the January-April period. Marchionne acknowledges that European operations suffered as he focused on the U.S.