Chrysler is planning to produce a Fiat-branded subcompact car at a plant in Mexico, insiders tell the Wall Street Journal. The move may anger two key shareholders of the restructured automaker—the US government and the United Auto Workers. Workers at the Toluca, Mexico, plant are represented by a Mexican union, not the UAW. "There is going to be political fall-out on anything in this kind of environment related to jobs," says one analyst.
Last spring GM, which like Chrysler received billions in taxpayer aid before restructuring, faced criticism for plans to build a car in China—and eventually relented, slating it for Michigan instead. But the American market for the Fiat 500, which gets about 40 mpg, may not be large enough to merit a US plant. Chrysler thinks it can export the car to Central and South America from the Mexican plant, but believes it would make little to no profit if it were assembled stateside.