Fiat Cannot Survive in the US Market

Ford Motor Co. (NYSE: F) has decided to dump most of its U.S. car models as the market swings to demand for sport utility vehicles, crossovers and trucks. Yet, none of those models has performed as poorly as Fiat Chrysler Automobiles N.V.’s (NYSE: FCAU) Fiat. In the current circumstances, Fiat Chrysler cannot keep the brand on the market in the United States.

Fiat sales fell another 45% in April to 1,404 from a year ago. Sales for the first four months also dropped 45% to 5,418. Management’s only comment was that sales were off 45%. There was no enthusiasm for new models, because there are none. And what could management say? Sales of the base Fiat, known as the 500, fell 72% in April to 335. That is about 10 sales a day. For the first four months, 500 sales are down 69% to 1,644.

Fiat Chrysler management must be considering pruning of its brands. The Chrysler brand’s sales fell 18% to 14,189 in April. However, that is still several times the Fiat results.

Ford killed almost all of its sedans, based on the assumptions this segment of the U.S. industry is dying. Gone will be the Fiesta subcompact, Fusion and Taurus, as well as the C-Max van. Among them, these nameplates sell tens of thousands of units per month, but that is sliding rapidly.

One reason Ford is killing the Fiesta and Fusion is that they are high-mileage and inexpensive models, which face withering competition from Japanese rivals and GM. Ford’s theory is that the market is too tight for all the cars in the segment to be successful. And Fiat is at the bottom of this pile.

It may be that Ford’s decision will prompt other car manufacturers in the U.S. market to follow its lead. If so, Fiat Chrysler has a lot of pruning to do. While its Jeep and Ram divisions do well, it has to face the struggles of many Dodge, Chrysler and, most of all, Fiat models.