Fiat Chrysler Dealers Cry Foul Over Inventory Glut

Certain Fiat Chrysler dealers aren’t happy with the inventory buildup that took place over the summer, claiming the automaker is headed back to the bad old days with the creation of a sales bank.

FCA, which just sealed a merger agreement with France’s Groupe PSA, claims its inventory is under control, touting a significant reduction in unsold vehicles during the third quarter.

According to four dealers who spoke to Bloomberg, the automaker has created a sales bank, placing pressure on dealers by saddling them with unwanted stock. The company’s unordered vehicles once numbered 40,000, showing a clear disconnect between factory output and actual sales.

The dealers didn’t make a connection between the merger deal and the growing inventory, but Bloomberg did. Past bouts of financial trouble and associated merger-seeking saw the company create sales banks. In its defence, FCA claimed a new predictive analytics system put in place earlier this year is helping the company pare down its inventory and better align supply and demand. No sales bank here.

“We’re producing pre-specificationed vehicles against predicted demand so the right vehicles are available when dealers need them,” said Niel Golightly, Fiat Chrysler’s global chief communications officer.

Bloated inventories can be seen in the average number of days a brand’s vehicles loiter on lots. After rising significantly in the early summer, data from Edmunds shows fewer days’ worth of stock in recent months. At the beginning of October, all FCA brands declined in this measure — even Fiat and Alfa Romeo. The Dodge brand boasted 65 days’ worth of vehicles, which is below the industry average of 76. Jeep was second-best in this regard at 85. Still, FCA vehicles spent an average of 101 days waiting for a buyer during the third quarter.

According to FCA North American Chief Operating Officer Mark Stewart, the new system lowered inventory by 120,000 vehicles during Q3 2019. The dealers that spoke to Bloomberg complained of pressure to take on vehicles they didn’t want, claiming the automaker didn’t provide the incentives necessary to move old metal.

FCA’s incentive spend per vehicle last month was an 11-percent increase from the same period a year earlier. Third-quarter sales were essentially flat, which is a better result than many of the company’s rivals, though year-to-date volume is down 1 percent.

[Image: Fiat Chrysler Automobiles]