Fiat US Sales Fall Over 40%, Endangering the Brand

December 3, 2018 by Douglas A. McIntyre

GM and Ford each have announced they will stop selling some of their car models in the United States. A brand made by Fiat Chrysler Automobiles N.V. (NYSE: FCAU) may well be next. U.S. sales of Fiat are down 41% through November to a tiny 14,544 units, less than 1% of the parent company’s American volume.

Fiat has a problem similar to that of other brands that have been discontinued. It is an inexpensive, high-gas-mileage, small-engine vehicle. In a world in which huge sport utility vehicles, crossovers and pickups rule the American market, there is no longer a place for the models on dealer floors, at least for those dealers who want to sell profitable, high-demand inventory.

The Fiat brand has four models. The sales of each have plunged in the first 11 months of this year. Sales of the base 500 are down 59% to 4,952 units. Sales of the longer 500L are down 12% to 1,374. Sales of the 500X, which Fiat says is a crossover, are down 30% to 4,887. Sales of the Spider sports car are off 21% to 3,331.

Each Fiat model is up against several competing vehicles from Japanese and U.S. car companies, as well as Volkswagen. The 500 has a base price of $16,275. Its tiny 1.4-liter engine gets 33 miles per gallon in highway driving. Among its competition are the Ford Fiesta, Toyota Yaris, VW Golf and Honda Fit. And that is only a partial list.

Fiat has several other disadvantages in a less and less attractive segment of the market. It does not have anywhere close to the number of dealers companies like Ford and Toyota do. It does not have marketing money or product development to gain more market share. A customer who enters a Toyota dealer has nearly 20 models to choose from, compared to Fiat’s four.

Fiat also has among the worst brand ratings in the car industry. The Consumer Reports review of the brand is consistent with many others:

The Fiat brand was reintroduced in the U.S. in 2011 with the diminutive, retro-styled 500. Despite attractive looks and fun driving experience, various crudities limit its appeal. The 500L proved unimpressive in our tests and is routinely among the least-reliable new cars in our reliability survey. The 500X is stylish and has some available safety features, but it had a rather mediocre performance in our testing.

Fiat also rates at or near the bottom of several other industry research studies.

Fiat’s poor performance has bottomed at a time when cars within its categories are regularly being pushed completely out of showrooms. It is very likely to be next.