By on January 17, 2012

The Fiat 500′s spectacular failure – selling less than 20,000 units in 2011, despite projections of 50,000 units sold- is quickly becoming the stuff of legend in automotive circles. Sergio Marchionne told CNN Money that the goal wasn’t really based on anything but wanting to beat Mini.

“It was a number that we said would be in excess of what Mini was selling in the United States. It was that simple,” he told CNN. Mini sold 45,644 cars in 2010 and 57,511 units in 2011. Fiat was only able to muster 19,769 vehicles in 2011.

Marchionne dismissed Fiat’s failure as a “rounding error” due to Chrysler’s overall sales of 2 million cars in 2011. According to him, plans for further product roll-outs, as well as the inevitable delay of an Alfa Romeo introduction, is still in the cards.

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69 Comments on “Marchionne Admits Fiat 500 Sales Target Was “Incredibly Naive”...”


  • avatar
    LeMansteve

    Expecting to jump right in and equal or beat MINI at their own game, in just one year, is incredibly stupid. On top of that it took MINI, what, 8+ years to reach 50k units per year?

    • 0 avatar
      Hank

      Yep. This isn’t really a failure of the car, but of the management to set realistic goals. In the big picture, the sales aren’t really that bad.

      • 0 avatar
        vww12

        Don’t forget that the idea behind the March 30th 2009 auto bailout was to get Chrysler access to the “technology and platforms” of Fiat’s small cars.

        Apparently the government is not as good at predicting consumer choices as it thinks it is?

      • 0 avatar
        srogers

        The technology and platform access seems to be coming to life with the new Dart. It is using an Alfa Romeo platform and Fiat Multiair motors (built in the US).

      • 0 avatar
        boltar

        Government (and everybody else) was pretty good at predicting that, without a buyer, consumer choice for Chrysler products in the future would be a big fat zero. They were damn lucky to get Fiat. Otherwise Chrysler would have been living the Saab story.

  • avatar
    Zackman

    Well, what did they expect? As a 61-year-old, I recall all too well the stellar reputation of Fiat from ancient times and I’m sure the older crowd trusts them about as far as you could throw them, deservedly or not.

    Next to a Mini, the 500 just looks “plastic-ky”(sic)

    I see these once in a while, but not often. How are they holding up, reliability-wise?

    • 0 avatar
      dejal1

      You can throw the old ones pretty far, the rust really lightened them up.

    • 0 avatar
      Bowler300

      5000 miles on mine and no problems at all.

    • 0 avatar
      Hank

      Yeah, but there are all kinds of problems with judging a current car by a 30 year old memory. I remember the GM diesels, but would be the first to point out that an 80s Olds and a current GM diesel don’t ever deserve to be mentioned in the same sentences.

      Memories are informative, but they are always an arbiter of the current state of reality. I remember what flying was like 30 years ago, but I wouldn’t show up at the airport with the same expectations today…

    • 0 avatar
      highdesertcat

      Zack, I agree. Fiat had an enormous legacy to overcome. Mini, quite the opposite. Mini, after all, is now a BMW product and most Americans do not remember the Mini Cooper of yore. Some ex-GIs like myself might.

      Still, the 500 has enormous potential for inner city sales. IMO what’s holding back sales is more price than legacy. For the money it costs to buy a 500 at any trim level, you can do much better buying another foreign tiny sedan at that same trim level, with air.

      Cuteness factor notwithstanding, the 500 still has a little ways to go before it develops its own following in the US. And with the Smart now leasing at $99 per month, I expect to see more Smarts on the road. And there is just something about a leggy blond in a short skirt egressing a Smart. It’s an image that was indelibly burned into my memory at the local Wal-Mart parking lot!

      • 0 avatar
        George B

        Part of the success of the Mini Cooper is that it’s a fun car. Fun to drive. Fun to customize. A little bit of BMW’s prestige rubs off on the Mini brand too. Those factors are still valid even out in the Suburbs where parking places are big enough to accommodate a F-150 in Raptor trim. In contrast, the Smart and the Fiat 500 are short in length, but not particularly fun to drive.

      • 0 avatar
        golden2husky

        And most have chosen to forget that BMW used to mean Breakdown Motor Works, but seem to have trouble giving Fiat a chance. My friend had a Fiat Brava, which was probably the most unreliable car I ever saw. But that was a 1980 model. Time to let past conceptions go…unless the new model proves otherwise.

      • 0 avatar
        highdesertcat

        I have no interest in BMW products. I’m not a fan. But it seems I read somewhere that BMW was the best-selling luxury brand in the world. They must have done something right.

  • avatar
    dejal1

    At least he manned up and said he chose the 50K. Very few at his level do that, regardless of industry. Most blame someone else downstream.

    • 0 avatar
      mike978

      I agree, but I think people sometime get too worked up about these (sometimes arbitrary) targets. Another example is VW reaching 800,000 in 2018. I suspect they won`t and will probably be in the high 600′s/low 700′s. No doubt some will complain and say they missed their target. Missing the point that sales may have doubled in less than 10 years. Time will tell.

      • 0 avatar
        Pch101

        I think people sometime get too worked up about these (sometimes arbitrary) targets.

        If you were going to spend six or even possibly seven figures to open up a Fiat store, and made that investment decision based upon such sales projections, then these would be something more than just “rounding errors” and “arbitrary figures”.

    • 0 avatar
      PenguinBoy

      “At least he manned up and said he chose the 50K. Very few at his level do that, regardless of industry. Most blame someone else downstream.”

      I’ve been really impressed by Sergio in this regard. He seems to be able to admit when he or is company is doing something poorly, and quickly change course rather than trying to save face, or endlessly analyzing the problem.

      Also, while his guess on the Fiat 500 may have been out, his overall assessment of the North American market seems to be pretty close.

    • 0 avatar
      Wheeljack

      I would think that Laura Soave would feel that she was blamed…

  • avatar
    AMC_CJ

    Does that count the Countryman and Club?

    Mini’s are too much for what they actually are (much like the BMW’s they’re under). The Fiat 500 doesn’t seem like a bad deal, except for the fact that a Sonic gives you more car, better mileage, and power; all for cheaper.

    Really waiting on the true small cheap car for this country. Something with lots of character, and not much else.

  • avatar
    redliner

    This isn’t Europe, and small cars such as the 500 are almost always bought as “lifestyle accessories.” Right now, there are simply too many competent choices for the average car shopper at the $18-$20k range. Those who choose not to buy a mainstream car, look to the established retro-cool niche brand, Mini. Fiat never had a chance. In fact, 20,000 units is better than I expected.

  • avatar
    indi500fan

    The two dealers here in Indy are smart. They put their stores in leased mall space, easy to bail if the brand fails.

    FWIW they are offering these at 199/month with zero down.
    And I saw my second one ever on the road yesterday.

  • avatar
    getacargetacheck

    There’s no nostalgia for the 500 or for Fiat in the US. Instead, Fiat should be doing what VW is doing: selling Camry and Corolla alternatives. That’s where the volume is. The Dart should have been a Fiat, and all Fiats should be sold at CDJ dealers. If they continue down this road they’re looking at a Smart-sized failure.

  • avatar
    Pch101

    “Naive”? I don’t believe that for a second.

    He needed to have a projection that would convince the dealers to sign up. Had they offered a more realistic number, they would have ended up with fewer dealers or the need to offer them better terms in exchange for taking the risk.

    I’m just surprised that car dealers could be so easily duped. They make a living lying to people. Surely, they ought to have known better…

    • 0 avatar
      tallnikita

      Wanna bet that 50K projection was nowhere in the dealer contracts or literature leading to the contracts? ’cause if there was, Sergio just bought himself an expensive misrepresentation claim to resolve. I think their carrot is Fiat’s full time presence with a number of models somewhere down the road.

      • 0 avatar
        Pch101

        Wanna bet that 50K projection was nowhere in the dealer contracts or literature leading to the contracts?

        I wouldn’t take that bet about the contract. It’s highly unlikely that there is a contractual breach. But there was probably a snow job.

      • 0 avatar
        windswords

        I think Pch101 nailed it. Promise big to get dealers to commit $. Worry about reality later.

  • avatar
    V572625694

    Maybe Sergio’s following the Lincoln strategy of keeping sales low to give customers more individual “attention.”

  • avatar
    VanillaDude

    We are in the worse economic times since Disney invented Mickey Mouse. There is no room for failure in today’s market.

    Take a look at the awesome car companies that went down during the last depression. Making good cars is not good enough in times like these.

    That’s the way it goes when the economy goes south.

    • 0 avatar
      tallnikita

      >>Making good cars is not good enough in times like these.

      I think the big H from Seoul is proving your otherwise.

    • 0 avatar
      highdesertcat

      No room for failure, indeed! There’s GM. There was Chrysler. Both failed. WE, THE PEOPLE, picked up that tab all to keep the UAW working and living large on the tax payer dime. Good deal!

      Aside from the US auto industry there were plenty of business failures in America, many which were selectively bailed out by two administrations. Too big to fail! Remember that?

      And on the flip side are the successful car companies of these dire economic times. Companies like Ford, struggling to rise from the ashes of the 2008 US auto industry, and doing pretty good with better products because of “government loans on steroids, slathered with special tax accommodations and infinitely deferred repayment terms”. How can we get in on a deal like that? WE don’t! WE foot the bill.

      The imports and transplants speak for themselves. Better products make for better sales, even if badgered by Ray LaHood and the DOT like Toyota was with the trumped-up SUA allegations. Proved negatory! WTH, damage done and still the Camry outsells every sedan in America. Major WOW factor.

      In the end, the better products in the market place will garner the most sales. That hasn’t changed since the day the wheel was invented.

      The 500 will do better when it starts to overcome the Fiat legacy in America and the price comes down to match actual demand. Maybe this year, 25,000.

      • 0 avatar
        WRohrl

        Could you please shed more light on the statement above regarding Ford’s “government loans on steroids, slathered with special tax accommodations and infinitely deferred repayment terms”

        I am specifically interested in the “infinitely deferred repayment terms.” Are you really saying that Ford does not have to pay it back?

      • 0 avatar
        mike978

        Can we get away from thinking that there recalls of all those Toyota’s were all false and malicious. Some, maybe even the majority, were but plenty of the 10 million were valid. My 2008 Sienna had two valid recalls for serious issues.
        Also I would like to know if any other auto company has had problems with “ill fitting” carpet mats leading to death?

      • 0 avatar
        tonycd

        Okay, another fiction post that was probably spiffed by five bucks from the Koch brothers. Here goes again…

        The auto bailout was never intended to be a bet on GM or Chrysler to become the world’s foremost automakers. Nor was it a bone tossed to unions. It was part of a larger, desperate campaign to stave off what, at the time, looked like the brink of a total economic collapse into the next Great Depression. When you measure the number of jobs saved and the larger disaster averted against the money spent, it was hugely more successful than, say, the previous president’s gifts to Wall Street banks.

        Something else I utterly fail to understand: Why should we as a public be angry that the jobs that were saved were good-paying jobs? You make it sound like we’re paying 100% of the salary for a bunch of welfare recipients. What we did instead was create the most effective kind of economic stimulus: preserving the incomes of breadwinners who would go out and spend the money. That’s exactly the opposite of putting the money in the hands of billionaire “job creators” who then would either sit on the cash or hire 5,000 Chinamen, neither of which would boost our economy worth a hoot.

        The world looks different when you don’t view it through Fox News’s lens. Try it sometime.

      • 0 avatar
        highdesertcat

        WRohrl, you need to dig a little deeper into government loans to the US auto industry or Wall Street. They look really good on paper, but, aside from Lee Iaccoca paying back Chrysler’s loan decades ago, repayment is always the exception, never the rule.

        Remember the bail out ‘loans’ given to Chrysler to keep it going? That’s all been forgiven and forgotten as part of the bribe to persuade Fiat to take Chrysler’s carcass off our hands. Chalk up another loss for taxpayers Joe Sixpack and Sally Homemaker.

        Since I bought my wife a 2012 Jeep Grand Cherokee, I hope Fiat stays in business for the length of the warranty period, just in case the JGC needs warranty work done. There is a well-documented decades-long history of that.

        Mike978, there is a train of thought, even among Toyota dealers, that all those Toyota recalls were bogus (because they never found any errors on the millions of cars they inspected except for the American-made CTS gas pedals) and merely a tactic to show that Toyota was responsive.

        But the motivation on the part of the US government was clear to anyone: destroy the reputation of the world’s biggest car maker, namely Toyota, in order to sell more cars made by recently bailed-out Government Motors.

        Even though Ray LaHood proclaimed that they “weren’t done with Toyota yet”, they really were done before they even started. And later testimony before Congress cleared Toyota of any and all of these allegations.

        Ironically enough, it wasn’t the US government that nailed Toyota to the cross, it was Mother Nature and the resulting disasters that did Toyota in. Some could argue that God was on the side of Government Motors.

        tonycd, like most Americans I am opposed to bail outs of any kind, to anyone, anywhere. Selectively determining who lives and who dies in business is wrong. There was a reason why each of those businesses died.

        If what you believe is the right way to handle things with bail outs, why are we not bailing out every business that fails? Why only the select few? Why don’t we just nationalize everything?

        I am a political Independent. I started out life as a Democrat. I’ve been a Republican during my working years. Now I think for myself. I watch CNBC, Bloomberg, CNN, MSNBC and rarely Fox.

        I rarely watch Fox because I cannot stand the anchors interrupting their guests. What’s the point of asking guests a question if the anchors are not going to let them answer?

        The only beneficiary of the GM and Chrysler bail outs was the UAW. The tax payers are the big losers. So it is up to the tax payers to either buy GM and Fiat products if they believe in these bail outs and nationalization, or vote with their feet, as they did over the past three decades that ultimately resulted in the death of both GM and Chrysler. Time will tell.

      • 0 avatar
        carbiz

        @tondycd +1 We may never know how close to the brink we came in 2008. I do know that 30% of my retirement savings disappeared in 6 months – and my investments performed far better than the markets did!
        Much has been written about Ford’s struggle. It was just GM’s bad luck to be doing better than Ford in 2006 when the banks still had money to lend!
        Sales in the U.S., Detroit’s biggest market, dropped by almost 50% in one year. Tell me, highdesertcat – how many businesses out there do you know can sustain a 50% drop in sales and survive?
        It’s odd that on an auto enthusiast site so few people understand how important the auto industry is to the very lifeblood of a nation. I’ve harped about this before, but it’s the value-added jobs, patents and intellectual property that are strategically important to a first tier nation. Without those, a nation is finished.
        It is bad enough that the Pentagon has to beg Korea and China for touch screens in their weapons. If attitudes like highdesertcat’s had prevailed, then tanks and bombs would have to be built in Asia, too. That’s great, provided the next Big War is not WITH Asia.

      • 0 avatar
        WRohrl

        Highdesertcat – Perhaps I was unclear in regard to my question – Where does it say that Ford does not have to pay the loans back? Or is that not what you claimed in your post? I neither want nor need to dig into what happened in other unrelated cases, I merely would like a pointer to the factual source of your stated claim. I’m not casting doubt on your assertion, I merely want to know where I can verify the specific claim (that of Ford not being on the hook for a loan) myself. I glean a lot of information off this site, if I want to re-use it elsewhere I would like to be able to up back up my statements with source material beyond “I read it on some blog comment somewhere”.

        What other government loans to the US Auto Industry were forgiven? Heck, what other government loans to the US Auto industry were there? Is there a list somewhere? As far as I am aware, the Chrysler situation in the 80′s wasn’t even a direct government loan, it was a loan GUARANTEE. Different thing entirely.

  • avatar
    mcarr

    A sparse dealer network and an engine that can’t maintain freeway speeds up a grade. I drove one and liked it, but the base model needs another 20 hp for me to consider it.

  • avatar
    stryker1

    I’m hoping that in 2 years I’ll be able to buy a used one of these for a knock-knock joke, and half a cold cup of coffee for my fiance. Its a nice toy car, but that’s all its worth.

  • avatar
    Omnifan

    I liked Sergio’s comment in the story in Automotive News….

    “We thought we were going to show up and just because of the fact people like gelato and pasta, people will buy it,” Marchionne told reporters on Jan. 11. “This is nonsense.”

  • avatar
    wmba

    Well, they sold 5108 of the Fiat 500 in Canada last year. If the usual 10 to 1 sales ratio had occurred, then 50K could have been sold in the US.

    I get my car sales stats from:

    http://www.goodcarbadcar.net/

    This site has US and Canadian sales, plus some UK stats each month. Happens to be out of Nova Scotia where I live, but never met the man myself.

    • 0 avatar
      carbiz

      Ha! Canadians will buy anything, so long as it’s imported. Hyundai and Kia are going to overtake Japan Inc in Canada very soon – yet they support almost no jobs in this country. In a country where 80 years of Detroit’s presence is ignored, many Canadians view all vehicles as ‘imports’ equally.
      And you’re also talking about a country where Chrysler may overtake GM in sales for 2012. Yes, it’s that bad here!
      Still, Chrysler has a dealership in downtown Toronto. Honda and Toyota have 2 or 3 each. I have to drive 20 minutes out to the suburbs to have my GM serviced. That’s gotta hurt sales.
      Then again, $5 a gallon is a distant memory here – that makes a huge difference in buyer’s choices.

  • avatar
    gslippy

    2012 will be the deciding year for the 500, and possibly the Fiat/Chrysler combo.

    I agree with ‘redliner’ – the competition in the $18k range is very tough, and the 500 doesn’t measure up. People buy it because it’s cute.

    The 2013 Dart will far outsell the 500, and I think the Abarth will end up being low volume.

    • 0 avatar
      moorewr

      The local dealer is telling me the Abarth 500 is “limited release” and answered my query as to when they will have them for test drives by asking for a $750 deposit.. as good a way to depress sales volume as any I could devise (other than dealer markups).

      I figure I’ll give it six months and go play hardball for one sitting on the lot. :)

  • avatar
    mjz

    Nothing that a $2,000 across the model range price cut wouldn’t cure.

    • 0 avatar
      Wheeljack

      Agreed – $2,000 cheaper at each trim level would be more in line with other competition. This car does not have the reputation or cachet to sell at a premium.

  • avatar
    mjz

    Last month, Fiat sold about 2,300 units with only about 130 dealers. Ford sold around 3,600 Fiestas with something like 2,000 dealers. So really, which one is the bigger failure? Quit pick’in on the little Cinquecento.

  • avatar
    krhodes1

    I think the only real mistake (other than the inflated projections) was requiring the stand-alone dealerships. If they had 500s in every Chrysler store, they might well have sold 50K of them. But when it is literally hundreds of miles to the nearest dealership, like in much of the US, it is a tough sell no matter how good the car is.

    I will say that here in Portland, ME, I am seeing a fair number of 500s on the street compared to Minis. We have a local FIAT Studio, but the closest Mini dealer is 100 miles away in Massachussetts. So if you want a Mini, you really, really have to want one.

    I also don’t get the pricing criticism – the base 500 is very keenly priced, IMHO. Sure, you can tart on up past $20K, but you don’t HAVE to, the base car has all it needs.

    • 0 avatar
      Advo

      That reminds me of Mercedes’ failure to sell the Smart in their existing European dealerships. It made something that was very popular into a big money loser, if I recall correctly.

  • avatar
    AGR

    In Canada for 2011:

    Fiat 500: 5,392

    Mini: 5,155

  • avatar
    threeer

    This topic has been reported more than once here on TTAC…almost verbatim. We KNOW the sales did not meet projections…got it. There are myriad reasons (my 2 cents…availability at less than easily accessible dealerships and perhaps a $2000 across the board price premium) for the sales figures. In the end, I still want one…:)

  • avatar
    Joss

    20 + 5(can) = mid-expectation but Sergio was it worth development costs for NA platform and automatic? You were sooo worried about EU spec not working here.

  • avatar
    fred schumacher

    I saw the Fiat 500 as being a “chick” car in the American market. I think so did Fiat-Chrysler. That’s how the advertising program went; that’s why so many were built with automatic transmissions. We were wrong. The market for the 500 appears to be enthusiasts who want a car to thrash around that doesn’t have so much power it will get them into trouble. Ergo the shortage of 500s with manual transmission.

    • 0 avatar
      Wheeljack

      I’ve read similar articles about the glut of automatic vehicles on dealer lots and customers walking away since no manuals were available.

      Unless they changed course, I also think it’s dumb that the top trim level (Lounge, I believe) comes in automatic only – don’t assume that someone who wants leather and some nice appointments doesn’t want a stick, especially in a small car. If this hasn’t been rectified, that would be the first “product” change I would make. Surely there are plenty of manuals available (i.e. not a supply issue) since they sold less than half their target.

      • 0 avatar
        fred schumacher

        I think they did learn from their Fiat 500 experience, since the new Dodge Dart will be available with a manual transmission in all its trim levels.

        I’ve also heard rumors that a stretched version of the 500, a Giardinetta wagon, is being developed. That, I think would have more appeal for Americans, who, unlike Europeans, see the 500 as being just too small. If this wagon version were aimed at the economy, not premium, market and made available with the Twinair engine, which has more torque than the non-turbo 1.4, they could have a winner on their hands.

      • 0 avatar
        fred schumacher

        Today’s issue of USA Today reports on a Bloomberg story that Fiat will show a station wagon version of the 500 at the Geneva Auto Show in March and will go on sale in the U.S. next year, according to Fiat brand head Olivier Francois.

        The article goes on to state: “… the bigger four-door hatch has been developed specifically for the U.S. market, Dave Sullivan, a product analyst at AutoPacific, told Bloomberg by phone. “There needs to be a reason for people to downsize and spend more for less other than fuel economy and good looks. Dealers would welcome with open arms something with more utility and space” than the 500.”

      • 0 avatar
        ciddyguy

        Fred Schumacher,

        If it’s what I think you are referring to, it’s the larger B segment Fiat 500L, a 5 door hatchback/wagon like vehicle with elements of the Panda in the body, the 500 in the front snout.

        And that is, I think what the 500X (a 4WD vehicle)is going to look like though I’ve not seen the photos of it up close.

  • avatar
    redseca2

    I could never figure out the 50,0000 sales in the first year.

    These are a brilliant, fun solution if you live in Manhattan or San Francisco or similar congested place and need a car for short errand running and people moving chores. Or a car for a 30 mile each way commute that will never get over 55 MPH. Maybe a loaner car if you are a 1%er. But a car for rural and suburban living, and only car, i coudl never see that.

  • avatar
    newusedcarssacramento

    As we seen in last year (2011) Fiat 500 sold just 19,769. In that situation how Fiat can fix the unit like 50,000 in year 2013. Maybe the marketer will have taken new strategy or something more…

    http://www.newusedcarssacramento.com/

  • avatar
    FJ60LandCruiser

    Americans don’t want to buy a style over substance underpowered metrosexual city cruiser built by FIAT (a brand known for its rock solid durability) following a government bailout of Chrysler? I’m shocked and amazed!

    As for Marchionne, give the guy a job in DC. He makes a bold statement of moving 50k units, but when he fails to even reach half of that he attributes it to a “rounding error.” Such incredible ineptitude with large sums seems to fit right in with our Congressmen and other numerically retarded elected officials. Next year what’s the target? A billion?

    • 0 avatar
      fred schumacher

      LandCruiser: go back and read the article. It states: “Marchionne dismissed Fiat’s failure as a “rounding error” due to Chrysler’s overall sales of 2 million cars in 2011.” The “rounding error” was in reference to 2 million cars sold, not 50,000. I think one attribute that can be firmly applied to Marchionne is that he is clearly not “inept” with large sums, as he has resuscitated several companies successfully.

  • avatar
    willbodine

    Can’t explain why, but the 500 is a hit in Palm Springs. Had no idea they came in so many colors/option packages. I like small cars, but a Fiat sold by Chrysler? Doesn’t strike me as a good idea.

  • avatar
    capdeblu

    Fiat/Chrysler needs to put a Hyundai like warranty on this car ASAP

  • avatar
    Andy D

    I cruise the highway in my company Transit Connect. I’m doing the limit or maybe a bit less. Smarts pass me all the time. I have seen a few 500s, but havent paid attention to their speed


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