As Fiat Sales Continue Collapse, Questions About Its Viability Rise

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Fiat Chrysler Automobiles N.V.’s (NYSE: FCAU) U.S. Fiat operation got two pieces of very bad news recently. One was that it finished last in the American Customer Satisfaction Index, tied with stablemate Dodge. The other is that Fiat sales collapsed 23% in August to only 2,120. It is hard to see why Fiat Chrysler continues to invest in the brand’s presence in America at all.

Fiat is not new to poor customer satisfaction grades. It posted poor reviews in a recent Consumer Reports evaluation of the industry’s major brands. It has also scored at or new the bottom of the widely followed J.D. Power research. The American Customer Satisfaction Index data only add to the trend. The ACSI Automobile Report 2017 was based on interviews with 3,934 customers posted between July 1, 2016, and June 20, 2017.

Fiat’s August numbers were undermined in part by a drop in the sales of its latest model, compared to August 2016. Until August, sales of the Spider had risen. That trend helped Fiat’s numbers look less dismal. In the first eight months of the year, Spyder sales rose from 941 in 2016 to 3,332. However, in August sales dropped from 460 last year to 382 last month.

Fiat’s primary vehicle is the 500 series, a group of inexpensive, high-mileage cars. Among these, sales of the base 500 model have dropped 7% to 9,419. Sales of the 500X are down 38% to 5,237. Sales of the 500L have fallen 61% to 1,058.

It is hard to imagine how Fiat dealers react to supporting a brand that does so poorly. Fiat vehicles tend to stay on dealer lots for more days than almost all other brands. Dealers have to support Fiat with marketing, service staff and trained salespeople. Many Fiat dealers sell other brands, but that does not entirely offset the drag of a car that consumers do not want and that carries the stigma of low consumer opinion.

Fiat Chrysler has enough problems in the U.S. market already. Overall sales of its cars and light trucks dropped 11% in August to 176,033. And this drop comes at a time when the entire industry is in a battle for market share as overall U.S. industry sales continue to slide most months. Every Fiat Chrysler brand posted worse numbers in August 2017 than in August 2016.

Fiat is dead weight that Fiat Chrysler cannot afford.