Fiat Chrysler Automobiles N.V. (NYSE: FCAU) has a problem in the United States. One of its most important brands sold only 31 cars a day last month. That leaves open the future of the brand in a market where manufacturers are pulling underperforming models.
Fiat is one of its parent company’s bestselling brands in Europe. It has never caught on in the United States. Last month, only 933 Fiats were sold, down 35% from June last year. Fiat sold 5,103 vehicles in the first half, down 38%. Sales of each of its four car models have dropped over the period as well.
What has happened to Fiat in America? It has sold vehicles on and off here since 1908. After exiting the market in 1983, it did not return until the marriage of Fiat and Chrysler, which brought the brand back to the United States in 2009. It has struggled over the decade since then, becoming one of the cars Americans don’t want to drive.
Fiat has three primary problems. The first is that the U.S. market has a large number of small-engine, high miles per gallon, inexpensive cars. Every major manufacturer from Nissan to Toyota to GM has at least one car in this market, if not more. The base Fiat 500 has a starting price of $16,495. Its small 1.4-liter, four-cylinder engine gets 30 miles per gallon on the highway. That is very similar to the Nissan Versa sedan, Toyota Yaris and Chevy Sonic.
The second problem is that Fiat only sells four basic cars: the 500, 500L, 500X and Spider. Most other manufacturers have a much larger selection of models in their showrooms, which allows them to bring in a wider variety of shoppers. Manufacturers are starting to kill sedan and coupe models in the United States, as consumers move to crossovers and sport utility vehicles. That raises the question of whether Fiat cars will continue to be sold in America at all.
Perhaps Fiat’s major problem is its extremely low reputation for quality. Fiat often sits at or near the bottom of ratings from the two major car research firms, Consumer Reports and J.D. Power. Car buyers use these ratings when looking at cars. Fiat recently ranked dead last in the J.D. Power 2019 Vehicle Dependability Study, and Consumer Reports ranks it as the worst car brand — and these are the other worst (and the best) car brands in America.