Chrysler may build Fiat 500 minicar in Mexico

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Chrysler Group LLC, now being run by Italian automaker Fiat Group SpA, is planning to build the Fiat 500 minicar at a factory in Mexico, according to a person briefed on the company's plans.

The automaker also is considering building a compact car in the United States that could be larger than the 500, according to the person, who did not want to be identified because the plans have not been made public.

U.S. production of fuel-efficient engines and a small or midsize vehicle, as well as selling more Chrysler vehicles outside North America, are milestones by which Fiat can raise its Chrysler stake from 20% to 35%.

Chrysler spokesman Gualberto Ranieri declined to comment Monday. But news of the Fiat 500 decision disappointed several members of the UAW who once hoped that the minicar would be made at the company's Sterling Heights assembly plant. That plant is to close by the end of 2010.

Chrysler has received $15.5 billion in U.S. government aid.

"We want to keep as much work as we can in this country and in Michigan," said Bob Stuglin, president of a UAW local at the Sterling Heights parts stamping plant, which is close to the assembly facility.

The 500 likely will be built in Chrysler's Toluca plant, where workers now assemble the PT Cruiser sedan and Dodge Journey crossover vehicle. Chrysler also has a truck assembly plant in Saltillo, Mexico.

Even though the UAW has made concessions to reduce labor costs, workers still make less per hour at Mexican factories.

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