The Fiat brand of Fiat Chrysler Automobiles N.V. (NYSE: FCAU) sold fewer than 1,000 cars in December, begging the question whether it can ever be a success in the United States. Fiat does well in Europe, where it is a cornerstone of the parent company’s sales there.
In December, Fiat’s U.S. sales dropped 44% to 977, down from 1,738 in December 2017. For the full year, Fiat sales fell 41% from 26,492 to 15,521. The division is a tiny sliver of Fiat Chrysler’s U.S. operation, which sold 2,235,204 cars, sport utility vehicles, crossovers and light trucks last year, up 9%.
How can Fiat do so poorly? One reason is that it is in one of the most competitive segments of the American car market. Small, high-mileage, inexpensive car brands are a staple of every major car company’s lineup, from Ford’s Fiesta to Chevy’s Spark and Toyota’s Yaris. Every major car company has a similar vehicle. The base Fiat 500 has a price of $16,245. It runs on a small 135 horsepower engine and gets 33 miles per gallon for highway driving.
Second, small and midsized sedan sales have plummeted throughout America as buyers turn to SUVs and crossovers. Ford made the decision last year to kill most of its sedan models because it said plunging sales were causing losses.
Fiat also has an image problem. It has been criticized for low quality by major car research firms like Consumer Reports and J.D. Power. Fiat competes in a U.S. market in which most car companies can market their cars as high quality. Fiat does not have that opportunity.
Fiat has a problem due to its limited lineup. It only has three models — the 500, 500L and 500X. This limited model line makes Fiat unattractive to many dealers, another barrier to high sales.
Fiat is an orphaned brand, so one has to wonder why Fiat Chrysler keeps it when its sales are so low and sedans have become less and less popular.