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Fiat’s Soave Bets Big on Texas

Bucking skepticism from her colleagues, Fiat’s Laura Soave insisted on heavy penetration in Texas. Today the state is “kickin’ (butt),” she says.

CHELSEA, MI – Laura Soave has made so many right calls for Chrysler, she likely could make a second living as a handicapper.

When the Fiat 500 product program was being drafted, Soave, the brand’s top executive in North America, dismissed doubters within the company and insisted on adding a high-performance Abarth version of the minicar.

The change was made and now dealers are chomping at the bit for the car’s first-quarter 2012 rollout. “I told them not to, but they’re taking deposits,” Soave says, vindicated but somewhat uncomfortable.

On the eve of the 500’s fourth full month on sale in the U.S., another Soave bet appears to be paying off. “Texas is still kickin’ (butt) even though everybody didn’t think they would be,” she tells Ward’s.

Bucking still more skepticism, Soave insisted on heavy penetration in Texas. So Chrysler approved 10 franchises for the Lone Star State, a total second only to California and tied with New York and Florida.

“People misunderstand Texas,” she says, suggesting the market’s affinity for pickup trucks represents just one of its dimensions.

Recently released 2010 census figures show a steady migration to urban centers from rural areas as Houston, with 2.1 million residents, maintains its long-held position as the fourth-largest U.S. city.

And while Dallas dropped to ninth place from eighth, with 1.2 million residents, San Antonio leap-frogged to seventh from ninth with 1.3 million residents, making Texas the only state besides California to place three cities in the nation’s top 10.

When suburban populations are factored into the tallies, Texas is the only state with two communities in the top 10 – Dallas-Fort Worth-Arlington and Houston-Sugar Land-Baytown, with resident totals of 6.4 million and 5.6 million, respectively.

Ed Paez, Fiat studio director at Northside Fiat in The Woodlands, just north of Houston, reminds that the state’s population has a distinct cosmopolitan flair to match its increasingly high-tech economy.

“You have people that have been brought in to work in the energy field and the computer field,” Paez tells Ward’s.

Factor in urban sprawl and commuting becomes an integral part of daily life. “And Houston does not have a rail system like you find in many urban areas,” he says, adding a car such as the 500 represents a stylish, sensible solution to the daily grind.

Logic suggests these urbanites would prefer automatic transmissions. Not so for 500 buyers.

“Dealers are ordering up to 70% manual,” Paez says of the 500’s 5-speed gearbox. And there ends Soave’s betting streak.

“I did not call that one,” says Soave, a strong proponent of the Aisin-built new-for-’12 6-speed automatic gearbox for engineered specifically North American buyers because the robotized automatic on the overseas-market car was considered too balky.

“We’re all very surprised,” Soave says of the manual-transmission take-rate, which is trending at 50%.

Similarly, the 500c – the cabrio version of the car – is proving more popular than projected.

“I can’t keep them in stock,” Soave says, adding dealers are reporting turn rates of five or six days. “We’re looking to shift more (production) to cabrio.”

Current demand suggests a mix in the range of 15% to 20%. “We had originally anticipated 10%,” says Soave, who attributes the higher-than-expected popularity to the novelty factor.

There now are 70 Fiat dealers in the U.S. The brand plans to have 130.

The car has been on sale in the U.S. since March. Through May – its best month with 1,759 deliveries, according to Ward’s data – Chrysler has recorded 3,141 sales.

Based on this curve, Ward’s expects 2011 deliveries will range between 30,000 and 35,000.

Chrysler’s plant in Toluca, Mexico – sole source of 500 production for the Americas – has annual capacity for 100,000 units.

A national advertising push touting the 500 is set to launch July 4.

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