Fiat Hurtles Toward Oblilvion

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In what was among the worst months overall for U.S. car sales in recent years, results for the Fiat brand of Fiat Chrysler Automobiles N.V. (NYSE: FCAU) turned out as particularly dismal in July. Fiat sells less than 75 cars a day nationwide, based on results from last month.

Fiat sales fell 18% to 2,244 for the month. For the first seven months of the year, they were down 13% to 16,926. The drop follows a long-term decline. When results for the new Spyder sports model are backed out, the figures are alarmingly bad. Fiat sold 2,950 Spyder models so far in 2017, against zero last year, before it was launched. With the Spyder backed out, Fiat sales for the year are off nearly 30%.

Fiat has two major problems. The first is that it gets low-quality marks from important consumer research firms, particularly J.D. Power and Consumer Reports. Any potential buyer who checks reviews of the brand is almost certain to skip it as a new car option. For example, in the recent J.D. Power 2017 U.S. Automotive Performance, Execution and Layout Study, Fiat ranked next to last among all brands. J.D. Power looked at 32 brands.

The J.D. Power description of the study:

The 2017 U.S. Automotive Performance, Execution and Layout (APEAL) Study measures owners’ emotional attachment and level of excitement across 77 attributes, ranging from the power they feel when they step on the gas to the sense of comfort and luxury they feel when climbing into the driver’s seat. These attributes are combined into an overall APEAL index score that is measured on a 1,000-point scale. The study, now in its 22nd year, is based on responses gathered from February through May 2017 from nearly 70,000 purchasers and lessees of new 2017 model-year vehicles who were surveyed after 90 days of ownership.

Fiat is also in the extremely crowded low-price, high-gas-mileage part of the car industry. Virtually every major non-luxury car brand has a vehicle priced similarly to Fiat’s major model, the 500. Fiat probably would be elbowed out of most potential sales by larger brands, even if it had higher quality rankings. But it doesn’t.