By on June 21, 2013

Fiat in St. Tropez - Picture  courtesy

As we all know, the European car market is in bad shape. France, one of Europe’s volume markets, is especially hard hit. The month of May was no exception.  The French market was down 10.3 percent. Red ink and nose blood was running just about everywhere. Everywhere except Fiat. Fiat, the Italian patient, looks amazingly alive in France. Their passenger vehicle sales were up a whopping 12.3 percent in May and 6 percent for the first five months. In a market that tanks, just staying afloat would be a big deal. Double digit is huge. It was, until the scrappy auto site started digging. They found that the growth was made by dealers buying their own cars.

Says 7pm-auto in its daily bulletin (“Every day at 7pm – 20 minutes to read”):

“Since January 2013, the Italian car maker has lost 22% of registrations to individuals. But at the same time, self-registrations in the dealer channel increased by 26.4%. You want more? Fleet sales to companies and government : +31%. Short-term rental sales +48.3%. “

Looks like someone is desperate to make sales, non?

We called  7pm-auto  Editor-in-Chief Ali Hammami in Paris, to discuss the fact, as often written at TTAC, that short-term self-registrations  by dealers are a common phenomenon in Europe. Cars are reported as sold, they earn a hefty bonus for “making the numbers,” the manufacturer looks the other way, because a sale is a sale, right? So we ask Ali what the average self registration number was in France for the first five months.

“2.1 percent,” says Hammami.

And for Fiat in the same period?

“22 percent,” he answers.

Someone is really trying to look good ….

Pugnacious 7pm-auto already attracted attention of Reuters and other media. Keep your eyes on them – if you speak French, that is.

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11 Comments on “Fiat Shows How To Look Good In France: Buy Your Own Cars!...”

  • avatar

    Move the metal any way you can. Even a sale at a certain percentage loss is better than a 100% loss. Since it’s been made clear, at the behest of the Italian Government, that production isn’t stopping, this would seem like the best choice. They’re not the only one’s doing it either, Ford has been doing the same in Europe in light of the crisis.

  • avatar

    I thought all EU countries operated under the same commercial rules…

  • avatar

    Then what? Sell them as used? Who pays for the depreciation hit? FIAT through floorplan loans? Weird way to make money.

    I wonder if they pay full retail. :)

    • 0 avatar

      The dealer gets a hefty discount for meeting the sales target. The cars go on the used market at a nice discount to the buyer. Everybody wins, but only in the short term. The factory has to make good on the loans. The dealer has to shift the metal, somehow. The buyer will find that the resale value of his shiny ride is non-existent.

  • avatar
    Bela Barenyi

    Some people seem to know nothing about Italian companies in general and in particular nothing about Fiat. First of all, Italian companies tend to hire “local” management staff for their foreign subsidiaries and give them lots of freedom, instead of sending Italian mangement to the foreign subsidiary. A good example at Fiat is Fiat Brazil, because the Brazilian Fiat subsidiary enjoys an unbelievable freedom and indepence from the “mothership” in Turin which other subsidiaries, like Fiat Germany, can only dream of. As long as the local management is successful the parent company in Italy does not interfere with the day to day business of the said subsidiary. Fiat Brazil is that successful because the mothership Turin gives them lots of freedom. Even Marchionne does not dare to interfere with the Brazilian subsidiary’s business. As long as the Brazilian subsidiary of Fiat is successful, everybody in Turin is happy and no one is interested to change anything. The contrast is the Indian subsidiary of Fiat. In the last 20 years Fiat just failed in India. They changed their local partnership, they hired local management. Nothing really helped. Once they even asked management staff from Fiat Brazil to help them to crack the Indian market, but it didn’t help either, as India is not Brazil. The result is: Fiat India has less to no real freedom and is under the close watch of Alfredo Altavilla, one of Marchionne’s henchmen.
    So, the aim of every foreign subsidiary of Fiat is to “deliver” the right numbers in order to make the mothership in Turin happy and to
    enjoy freedom from it. The best example in Europe is Fiat UK. The have
    more freedom than any other subsidiary of Fiat in Europe. The best example of that freedom is how they avoided the entry of Lancia in UK.
    The Fiat UK management simply made it clear to the mothership that it would be worthless effort to re-introduce the Lancia brand in UK. This was way before the Chrysler takeover. The RHD Delta was even ready, but the FIAT UK management was completly against it. Also Fiat dealerships in UK made it clear that they’re not interested in getting
    Lancia as an additional and low performing brand stuffed up their throats. The least “independent” subsidiary of Fiat is Fiat Germany. Every small decision needs more or less the green light from Turin.
    Fiat France also does enjoy some freedom and indepence from Turin.
    Fiat France even thought about offering a “sporty” Lancia Thema/Chrysler 300, which is like commiting a sacrilege at Fiat,
    because Lancia is not allowed to offer “sporty” models which
    could compete with Alfa Romeo (I know a stupid strategy, but this dates back from the acquisition of Alfa Romeo in 1986/7 and the brand positioning strategy from back then). So, this “channel stuffing” of
    Fiat in France is more a sign of fear at Fiat France that the mothership in Turin might interfere with their daily business if
    they don’t deliver the right figures.

    • 0 avatar

      This is true up to a point. In the Fiat do Brasil case, people have fought for an Amarok like pu for yrs to no avail (and now the market may be too crowded). Also, in the last couple of years, hundreds of Italians have been sent over, even line supervisors. I can tell you the locals were not happy about that!

  • avatar

    Even a complete outsider can sense the oddity of a company choosing to expand its sales in the face of a shrinking market. Fiat’s choice to do so by segmenting its markets and cutting prices drastically (to, perhaps, variable mfg. cost) in certain of these is old stuff, and has been done in many businesses. It is often called “dumping”. The thing is that others don’t seem to be dumping to such an extreme extent. Why just Fiat?

    One revealing comment in this thread was that Fiat is doing this because it is, somehow, committed not to cut employment in Italy. This makes perfect sense in terms of managing the Italian macro economy, and it also suggests some sort of quid pro quo between Fiat and the Italian government, unlikely (if it exists) to be much of a secret even in Italy. Sounds to me like connecting the dots might make the basis for a really nice story.

  • avatar

    ::They found that the growth was made by dealers buying their own cars.::

    One thing I’d note for European travel, particularly in France, is that it is often cheaper to lease a car rather than rent one if you need a car for a longer vacation. In France, this number is 17 days, and several cars have a minimum lease period of 17 days. I believe in Germany, the number is a bit higher, more like 30 days, and in Italy, it might be the same.

    I’m assuming the resale values for “used” cars aren’t hit as hard as one might think by this practice of dealers buying their own cars, or else there’s no way these leases would be cost-effective.

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