Fiat's Eco 500: A Chrysler Badge in its Future?

(MoneyWatch)  ROME--There are still battered examples of the Fiat 500 that the Italian auto giant produced from 1957 to 1975 on the streets of the Eternal City, but they are gradually being replaced by the very sleek and very retro Panda-based 500 introduced in 2007. This is the car Fiat, through its pending alliance with Chrysler, might be producing in Mexico for North American distribution. Fiat spokesman Richard Gadeselli sees it as a Mini competitor, and it is approximately the same size, with even better gas mileage. The smaller 1.2-liter gas engine allows the 500 to achieve 50 mpg, and the larger 1.4 (more likely for the U.S. model) is in the 40s. Even better, a diesel version (very unlikely for North America) achieves 75 mpg.

Fiat has the lowest carbon dioxide emissions in Europe, 137 grams per kilometer, and according to Gadeselli one reason for those good numbers is its heavy investment in natural gas vehicles: the 85,000 CNG vehicles it sells annually are spread across all the cars and trucks in its range. Fiat has also built five million flex-fuel vehicles for the South American market that run on ethanol.

The 500, which met European emission standards two years ahead of schedule, has been a big hit, and is in every world market except North America. Gadeselli says the company expected to sell 120,000 last year but instead sold double that amount.

"It's a very sophisticated small car," Gadeselli said. "The technology has come very far since we produced the original 500." I'll take a test drive later this week and see if I agree. By then Chrysler's future--and its alliance with Fiat--may be much clearer.

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