Fiat Shows How To Look Good In France: Buy Your Own Cars!
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 7pm-auto.fr 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.
Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.
More by Bertel Schmitt
Comments
Join the conversation
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.
::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.