By on November 3, 2016

2017 Chrysler Pacificas

Debt-heavy Fiat Chrysler Automobiles could do with some more spending money, so why not try something new?

Figuring it can squeeze more money out of its products — and boost its stock — if it focuses less on volume, FCA has embarked on a new sales strategy that isn’t new in the industry. Call it the General Motors Approach.

Imitation, as they say, is the sincerest form of flattery.

October was a tug-at-your-shirt-collar month for the auto industry, with overall sales down 6 percent in the U.S., though FCA had it worse. The automaker’s sales slid 10 percent due to heavy losses at Chrysler and Dodge.

There’s more to FCA’s dismal sales month than meets the eye, Bloomberg reports, as the automaker slashed its fleet sales in the hopes of generating more profit through retail transactions. With the industry entering what looks to be a sales slump of undetermined length and severity, large numbers of low-profit fleet sales aren’t good for any automaker.

GM made a big deal about handing over fewer vehicles to fleets and rental agencies, and FCA clearly took note. That strategy seemed to have worked as the General posted record earnings in the last quarter and boasted a much more stable share price. FCA’s earnings rose 29 percent during the third quarter of 2016.

According to Bloomberg, FCA’s fleet deliveries dropped 23 percent in October. Meanwhile, GM trimmed its deliveries to rental companies by a further 19 percent while boosting the number of fleet vehicles sold to higher-profit commercial and government operators.

Despite the growing trend, fleet sales are still up 8 percent this year, according to Mark Wakefield of industry consultant AlixPartners.

[Image: Fiat Chrysler Automobiles]

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23 Comments on “Meh, Let’s Try it GM’s Way, Says Fiat Chrysler...”

  • avatar

    If they were trying it “old GMs way” they would be trying to make up for low profit with volume at all costs.

  • avatar

    I do not see FCA making this work , they have very few products that folks want beside Jeep and Ram and maybe a 300 , they have really given up on small and midsize cars and when gas goes up again they will be toast, better get the company sold before then, stuff the rental fleets w cars embrace the volume and then sell to the next sucker. They have some nice looking vehicles, Jeep GC and new mini van come to mind but I would not buy one new at all , heard to many recent stories how they do not hold up . And this is coming from somebody who drives a VW and a Saab so my bar is not super high.

    • 0 avatar

      So maybe that’s what they need to focus on. Dodge and Chrysler will just placeholders in the sedan market outside of the full-sizers. Maybe now that they don’t have to concern themselves with also-ran compacts and midsizers, they can concentrate on the niches where they’re successful and be profitable. Jeep, commercial vans and trucks. And take the time to turn Dodge into a worth competitor to Mazda, only RWD-oriented. Maybe even a legitimate BMW competitor at a lower price point (and correspondingly less luxury, but that’s OK too).

  • avatar

    Their products are still mostly crap, so there’s that.

  • avatar

    Hopefully they won’t also try GM’s way of squeezing their suppliers’ nuts until their fingers touch their palm, via a “One World” initiative that threatens suppliers with replacement by Chinese imports unless they deliver the part at the Chinese price.

    The result is not only screwing GM’s relationship with the suppliers (suppliers in an independent survey said confidentially they’d deliver a better-quality version of the same part to Japanese transplants than to GM), it also necessarily produces cheapened components that can’t be trusted for long life. Which is why GM’s improved rankings in INITIAL quality don’t mean jack.

    Of course, if you’re like FCA and even your initial quality is horrible, that might sound pretty good.

  • avatar

    I don’t see this as being a problem. In order to be the all things to everyone manufacturer you have to adopt a GM or Toyota approach. In many cases an automaker has to give up what makes them unique in order to grow to that size. I think we’re actually better off if manufacturers can create niches for themselves and successfully and profitably compete in that niche, rather than all trying to become 800 lb gorillas.

  • avatar

    Surely this “strategy” is just a result of winding down the 200 which was a fleet queen.

    • 0 avatar

      Frankly, a lot of their cars are fleet queens. The 300 is the vehicle I receive most often while renting, followed by the Cherokee, 200, etc. Sometimes they try to stick me with a Compass or Patriot and I flat-out refuse.

      On the bright side, almost all of Avis Canada’s Chryslers are fully loaded varients. Their 200s and 300s are V6 S models, the Cherokee and GC I sometime get are V6 Limited models.

  • avatar

    If FCA and GM are reducing their fleet sales, yet fleet sales went up 8% – who is filling the void? Hyundai-Kia and Nissan?

  • avatar

    We have some OEM customers that we make little money on. They keep the doors open and absorb some overhead, so we can make good money the small custom orders. Of course we don’t have stock owners breathing down our necks about monthly numbers.

  • avatar

    Poor Hertz drivers. All we have left are Nissans and Hyundais now.

  • avatar

    FCA doesn’t really make anything I want to buy.

    I can’t afford a 50k pickup, I’ve seen rust on 3 or 4 year old Rams-no thank you.

    Not in the market for a minivan

    A 300? Too big for me.

    Most of their SUV’s are overpriced for what you get….the most basic Wrangler costs 25K.

    Fiat? You have to be kidding me.

  • avatar

    I’ve gotten two calls in the last week from my local FCA dealership practically begging me to come in for 30% off their 2015 model leftovers. Unprecedented savings apparently. Too bad they have nothing of interest for me.

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