Fiat talking to the Big Three about North American Alfa Romeo production

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I guess low exchange for dollars has some positive effects: it'll make Alfa Romeo's return easier. And it'll probably help boost foreign investment into the US, rather than the other way around. So, my European friends, don't be surprised to find that your new Alfa 169 is built in Tennessee.

Alfa Romeo set for US return By Adrian Michaels and John Reed in Turin Published: March 25 2008 02:00 | Last updated: March 25 2008 02:00 Fiat is talking to Detroit's carmakers about sharing production of Alfa Romeos in the US as part of a three-pronged assault on the world's largest market for vehicles. The Italian industrial group, fresh from a turnround from near-bankruptcy, is also preparing to return its Iveco trucks division to the US and offer the pint-sized relaunched Fiat 500. Sergio Marchionne, Fiat chief executive, said he planned to start North American production of Alfa cars by 2011 or 2012. "I've always had the view that we had to produce in America," he told the Financial Times in an interview. Mr Marchionne said the weakness of the dollar against the euro compelled European companies to manufacture in the US. "Nobody making anything in Europe is going to make profits in the US," he said. "You can't. So we need to localise." Mr Marchionne said Alfa would distribute and sell cars in the US from next year, absorbing losses until production started with a partner. "I can suffer the loss initially, as long as I know I'm going to be producing enough." None of Chrysler, Ford Motor or General Motors would comment, but Mr Marchionne said: "You don't even need a full hand to count them, so let's assume that we know them all and we talk to them from time to time about a variety of options." The big three carmakers are scaling down their US operations and have many unused plants. Fiat withdrew Alfa from the US in 1995, a year in which its sales in the country were just 400 cars. In 2000, Fiat entered a strategic alliance with GM which acquired 20 per cent of Fiat Auto. The alliance ended acrimoniously in 2005 when GM paid $2bn (£1bn) to get out of an agreement which could have forced it to buy the car division outright. But the Italian company's ambitions have been growing since the car arm returned to profit in 2006. On Iveco, Mr Marchionne said the group had decided against a merger or acquisition in the US as a first step to relaunching in a country it left in the early 1990s. Instead, Iveco would attempt organic growth, using the network of Case New Holland. However, he said an Iveco merger or acquisition would be possible at a later date. Fiat planned to export its 500 car, which has sold briskly in Europe, to the US after expanding its range, Mr Marchionne said. "We need to replicate the [BMW-owned] Mini phenomenon in the US." Fiat's boss also reaffirmed his interest in working with Tata Motors if it buys Jaguar and Land Rover from Ford Motor, as expected, in a deal sources tell the FT will be signed this week.