Chrysler Group LLC plans to sharply increase its advertising spending and is on track to complete its Project Genesis restructuring and product development initiative by the end of the year, dealers and company executives said on Sunday.

The automaker managed by Fiat SpA plans to boost its 2011 spending on advertising by 68 percent, two dealers said after a franchise meeting at the National Automotive Dealers Association annual convention at San Francisco's Moscone Center.

A Chrysler spokesman declined to comment on the increased marketing expense.

We're spending money on marketing to seat the product in the customer's mind, said Peter Grady, vice president of network development and fleet for Chrysler.

The push comes as Chrysler delivers its product lineup of all-new or redesigned vehicles to dealer showrooms in the first quarter. Its 16 updated vehicles are the company's bid to win back consumers who have written off its products.

About 40 percent of dealer stock is the 2011 vehicles, Chrysler sales chief Fred Diaz said in an interview.

During the meeting, executives told dealers they would not spend money marketing vehicles until they were in the showroom, said Lonnie Cobb, a dealer who owns Humboldt Chrysler Dodge Jeep in Humboldt, Tennessee.

Marketing the new cars will be a key part of turning public perception about the company's offerings, the dealers and company executives said.

The boost in spending started when Chrysler bought a two-minute advertisement touting its new Chrysler 200, a much-revamped version of its much-maligned Sebring sedan, during the Super Bowl football game, the most-watched U.S. television event of the year.

PROJECT GENESIS

Grady also said Chrysler was on track to complete its Project Genesis initiative, the company's plan to encourage dealers to create superstores for its four brands, in 2011.

He said the plan was more than 90 percent complete.

Chrysler first unveiled Project Genesis in 2008. In this plan, Chrysler encouraged dealers to merge with or buy out other dealers to create superstores for four brands: Chrysler, Dodge, Jeep and Ram.

The effort was aimed at helping Chrysler streamline its product lineup and boost dealer profitability. More than 80 percent of Chrysler's dealers are profitable, Chrysler Chief Executive Sergio Marchionne said in a speech on Friday.

Chrysler spent $140 million on its dealer network in 2010 and plans to spend a total of $500 million on its dealers through 2015.

That money is being spent on opening training centers and helping dealers revamp their showrooms, Grady said. Chrysler is footing the bill for dealers to change their showroom signs after the company split its Ram brand from Dodge and changed the wing in its Chrysler brand insignia.

Chrysler is also encouraging its dealers to create four distinct environments in their showrooms to reflect each brand's identity. For instance, the Dodge brand emphasizes performance and so it needs to look like the cars are in motion, Grady said.

You got to get across who you are, Grady told Reuters.

(Reporting by Deepa Seetharaman; editing by Gunna Dickson and Editing by Vinu Pilakkott)

Chrysler Marketing