Fiat Sales Slaughtered in September

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Sales problems for the Fiat brand of Fiat Chrysler Automobiles N.V. (NYSE: FCAU) got worse in September as U.S. sales fell 24% to 2,206. The slide was worse than year-to-date numbers, which show sales down 15% to 21,252. Fiat has reached the point at which it is barely a niche product.

Fiat’s two top-selling models posted the worst erosion in sales in September. The base model 500 had a drop of 31% to 1,016 units. The 500X had a 24% drop to 638. Sales if the 500L rose 103% off a tiny base, which hit 209 units for the month. Spider sales were 343, compared to 490 last year. Instead of showing a percentage decline, Fiat Chrysler lists the Spider as a new model.

Fiat continues to battle two major problems. The first is product quality. Fiat routinely finishes at or near the bottom of consumer preference surveys from research firms including Consumer Reports and J.D. Power.

The second problem is harder to overcome than the quality issue. Fiat’s cars have competition from virtually every major manufacturer that sells cars in the U.S. market. Base prices of its models run from $15,000 to $25,000. Fiat vehicles are small and get good gas mileage. Some of the best-selling cars made by GM, Toyota, Honda and Ford fall into the same category. These manufacturers each have marketing budgets, product development capacity and dealer networks much larger than Fiat does.

FCA needs to decide what to do with the Fiat brand. It is probably too small to maintain. Other car companies have recently killed underperforming brands. The most notable is Toyota’s decision to discontinue sales of its Scion brand. The largest Japanese car company bowed to the inevitable; it could turn Scion’s fortunes around. FCA needs to do the same with Fiat in the United States.