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Poor Fiat 500 Sales Prompt Chrysler Layoffs

Posted in auto industry, Fiat, News by Kurt Ernst | November 17th, 2011 | 5 Responses |

The Fiat 500 Cabrio. Image: Chrysler Group LLC

When Fiat rolled out launch plans for its diminutive 500 city car, the Italian automaker was ambitious. Initial projections called for a network of 130 Fiat dealers selling some 35,000 cars in the U.S. this year. Instead, construction delays limited the number of dealerships for most of the year (although the total is now at 130), and a lack of advertising has left buyers confused about Fiat’s return to the U.S. market.

Through October, Fiat has sold just 15,826 Fiat 500 models in the U.S., and currently has a 184-day supply of inventory in the pipeline. A new ad campaign, starring Jennifer Lopez, will help, as will the upcoming launch of the enthusiast-focused Fiat 500 Abarth. None of that is enough to help workers in Chrysler’s Dundee, Michigan engine plant, which assembles the 1.4-liter mill used in the 500. Thirty employees have been laid off, while another 35 have been redeployed to other parts of the Dundee plant.

We’ve driven the Fiat 500, and are left wondering if personality is still enough to sell cars. If gas climbed above $5.00 per gallon and stayed there, we’d expect to see more consumer interest in the 500. As it stands now, the car is just too small and too underpowered to be appealing to Americans used to elbow room and acceleration. We think it’ll take more than an ad campaign to sell 500s on this side of the pond; what’s your take?

Source: Automotive News (subscription required) via Autoblog

http://www.autonews.com/apps/pbcs.dll/article?AID=/20111114/OEM01/111119963/1306

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5 Responses

  1. JamesM says:

    I can see Fiat being remotely sucessful. People are buying smaller cars but its hard to steal away sales from honda/toyota/nissan in those segments. They should of started off perhaps a little smaller and done a little more market research before just assuming they would sell 30k cars in their first year. I do agree, however, with the American assumption that if it doesn’t have pickup, it’s not worth buying but more and more people are switching to smaller less powerful cars for gas savings. Which, in the end, is the only sales advantage for this car.

  2. Paul1963 says:

    I think their biggest handicap was Marchionne’s insistence on the franchisees building expensive, stand-alone Fiat dealerships instead of allowing them to sell Fiats out of their existing facilities. My local CJD dealer was on the original list of franchises, but hasn’t built their Fiat store and, as a result, hasn’t received any 500s to sell. There were none at the Baltimore International Auto Show in February. The first time I ever laid eyes on a new 500 in person it was locked up in a multi-make dealership’s former Saturn building. The next one I saw was at the Carlisle Chrysler Nationals in July (drove it–no complaints from me there). I didn’t see any on the road in Maryland until August or September, and I’ve only seen a few since then.
    If they’d relax the whole Fiats-in-Fiat-stores-only thing, they’d probably move more of them.
    Of course, that doesn’t address the dealers who spent seven figures on branded Fiat dealerships, only to find that the 500 was all they were getting until 2013. That’s an awful big investment for a single model–Saturn at least had the SL AND the SC when they rolled out.

    • Kurt Ernst says:

      @Paul, I agree on all points. BMW did the same thing to its motorcycle dealers a few years back, forcing many smaller shops out of business. They build decent motorcycles, but with a very limited range of dealers (even in major metropolitan areas), service is a problem.