Fiat Cannot Survive in the US Market

By Douglas A. McIntyre Updated Jan 12, 12:11AM EST · Published May 2, 6:40AM EDT

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Fiat Cannot Survive in the US Market — © Thinkstock

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.

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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.

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.