Chrysler Sees Shift From Trucks To Compacts

Strong sales of Ram trucks helped Chrysler make a small operating profit in the first quarter. But as Chrysler prepares to sell the compact Fiat 500, some family-owned dealerships worry about customers who are reluctant to buy cars not made in America.

In his weekly address, President Obama said the government's investment in General Motors and Chrysler is paying off. General Motors made good on $8 billion in loans, and Chrysler reported a small operating profit. But Obama said some daunting challenges still lie ahead, especially for Chrysler.

Americans still love their trucks. And strong Ram truck sales helped Chrysler make a small operating profit of $143 million in the first quarter of this year.

On a recent spring day, in the small semirural town of Milan, Mich., Chris Hansen signs the paperwork at Schultz Motors and takes his new Ram on its maiden voyage.

Hansen did his research before choosing the Ram. He says none of the competition could beat the truck's features, style, towing capacity and price. This truck will get him to and from work every day. And it will also take his family and their 5,000-pound trailer all over the state.

"We decided early on we wanted to expose our children to the same types of things we kind of knew and loved, and those were the camping trips for me -- all those memories," Hansen says.

Hansen could have bought his truck at a bigger suburban store nearer his home. But he chose to come to family-owned Schultz Motors.

Challenging Times For Family-Owned Dealerships

Schultz Motors is no glitzy corporate dealership. It has wood paneling and a sliding screen front door. There's room for only two trucks in the showroom. People stop by just to say hello. This dealership will celebrate its 65th year of selling Chryslers this summer.

But Terry Schultz, the third-generation owner, says he almost didn't survive last year, and pulls out a newspaper clipping as evidence.

"Here's the picture of our lot in July with no cars on it," Schultz says. "And the last time you saw a lot with no cars on it at Schultz Motors was in 1945."

The Promise Of Chrysler's First Italian Offering

Today, there's at least something to sell. But change is on the way. In June, Chrysler emerged from bankruptcy by joining forces with Fiat, the Italian automaker.

The first Fiat vehicles to be sold at Chrysler dealerships will be the compact Fiat 500. Chrysler has never sold that small of a car before, and it plans to offer at least one version of the vehicle to North American customers later this year. Picture something about the size of a Mini Cooper out on the lot next to those manly Ram trucks.

Schultz says that with higher gas prices and tougher fuel economy rules on the way, smaller cars are the future. But he says the transition is going to be a balancing act since many of his customers want to drive a vehicle made in the U.S.

"They're at a point right now where they've got to hit the mark with that product or it -- that's your last shot," says Erich Merkle, president of Autoconomy.com.

He says Chrysler does have some good products coming. But they'll be coming a year or two after new vehicles from GM and Ford hit the market.

Eventually, the Fiat 500 could get people who've only ever bought Japanese-made vehicles into a Chrysler showroom. The trick is surviving until then.

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