Among the problems Fiat Chrysler Automobiles N.V. (NYSE: FCAU) CEO Sergio Marchionne has is that he cannot sell a car that has been successful in Europe after it was moved to the U.S. market. In April, U.S. Fiat sales dropped 19% year over year to 3,045, and they have fallen 19% for the first four months of the year to 12,054.
The sharp dip is worse than it appears. Fiat introduced its new 500X last year, so its performance of 5,058 in the first four months is against zero in the same period last year.
Fiat sales have faced at least two hurdles. The first is that it has gotten low ratings in two of the most important research studies watched by vehicle buyers. These studies come from Consumer Reports and J.D. Power. Presumably it is hard to sell cars that get such poor ratings when competing brands do so much better.
Fiat’s other challenge is its extremely small lineup. It has only three base models with sales that were measured in the first four months of 2016: the 500, 500L and 500X. These compete with an army of other low-price, high-mileage cars sold by virtually every other large manufacturer in the U.S. market. The price spread of Fiat’s basic models runs from $16,995 to $22,575. And Fiat offers aggressive discounts, which include a cash allowance up to $4,000 and financing of 0% annual percentage rate (APR) for 60 months.
Among the largest manufacturers, Toyota Motor Corp. (NYSE: TM) offers its Yaris at $14,895. It has a great deal in common with the Fiat series. Ford Motor Co.’s (NYSE: F) Fiesta carries a price of $14,090. Honda Motor Co. Ltd.’s (NYSE: HMC) Versa has a base price of $11,990. Presumably, all these brands have much larger dealer networks than Fiat.
Marchionne will have to put his shoulder to the wheel if he wants to fulfill the claim that Fiat’s success can be transplanted from Europe to America.
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