One Way to Reduce Massive Fiat 500L Inventory Glut: An Ongoing Strike at Serbia's Fiat Assembly Plant

Timothy Cain
by Timothy Cain
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one way to reduce massive fiat 500l inventory glut an ongoing strike at serbia s

Entering June 2017, Fiat Chrysler Automobiles’ U.S. dealers had a 219-day supply of Fiat 500Ls, roughly 1,400 cars in stock for a nameplate that generates fewer than 200 U.S. sales per month.

At least for the time being, however, U.S. Fiat dealers won’t be accepting any new copies of the 500L.

Unfortunately for the Serbian economy, the Fiat 500L’s inventory reduction in the United States is merely a byproduct of a strike at FCA’s Kragujevac assembly plant. That facility, which is one-third owned by the Serbian government, produces 8 percent of the nation’s exports.

Consequently, Ana Brnabic, Serbia’s prime minister, is advocating for the Kragujevac line workers prompt return to work. “It will be very difficult for us in the future to bring new investors when there is no certainty that workers will honor contracts between unions and employers,” says Brnabic, according to Reuters.

Workers are reportedly after a 30-percent pay hike, as well as workload alterations and transit assistance. FCA wants its workers back. The Serbian government wants FCA to get its workers back.

But car buyers do not want Fiat 500Ls.

Brnabic tells workers that Fiat will not enter further negotiations so long as the workers remain on strike. Now in its second week, the strike effectively shutters a plant that employs around 2,000 workers.

This isn’t the first time there’s been employee unrest surrounding the 500L’s Kragujevac facility. In late 2013, parts from a local supplier could not be delivered because a transport company’s workers were blocking railways. Demands made by workers in 2015 were not met. In early 2016, workers still couldn’t get the company to negotiate. One year ago, workers were laid off because of poor sales. Late last year, the plant went on hiatus because of weak global demand for the 500L, and not for the first time.

Fiat had initially hoped to sell 160,000 500Ls per year, a huge forecasting mistake on behalf of an ungainly and often unreliable car that didn’t offer the all-wheel drive of its Mini Countryman opponent — and didn’t offer the driving experience, either. At full capacity, the Serbian plant would be able to build 200,000 500Ls per year.

But by 2015, FCA Serbia was building only 100,000 cars per year. Production slowed to 70,000 units in 2016. Incidentally, prior to the massive renovation required to modernize the Kragujevac plant, the Yugo — another miserable failure — was assembled at the same location.

Specific to the U.S., the Fiat 500L’s initial dearth of popularity led to a severe downturn in the second half of 2015. Only 12,413 500Ls were reported sold by FCA in 2014, but that figure was cut by 37 percent in 2015. The 7,863 500Ls sold in 2015 was nevertheless an impressive figure compared with the 3,118 sold in 2016, a 60-percent year-over-year drop for a relatively fresh model with many of the characteristics that apply to vehicles such as the Kia Soul and Toyota C-HR.

The 500L wasn’t behind the times, nor is it ahead of its time. The Fiat 500L is just poorly executed.

Serbia’s economy, Reuters reports, was expected to report 3-percent growth in 2017. If the 500L’s Kragujevac strike continues, however, that rate of growth seems unlikely. Serbia relies on 500L production for 3 percent of its economic output.

[Image: Fiat Chrysler Automobiles]

Timothy Cain is a contributing analyst at The Truth About Cars and and the founder and former editor of Follow on Twitter @timcaincars.

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  • Fiat500USA Fiat500USA on Jul 13, 2017

    Sorry to rain on the hate parade, but what is left conspicuously out of the article is the Fiat 500L is the best-selling car in its segment in Europe for years, with more than 300,000 sold in past three years. Last year, the 500L had a 25.5% share with more than 81,000 units sold. So far this year, despite the small MPV market being down 10% compared to last year (an important fact also left out of the article) the 500L still accounts for 1 out of every 4 cars sold in its segment. This hardly sounds like a miserable failure. Maybe the Europeans know something we don't, like that the 500L has the interior room of a full-size car and it has unmatched versatility with 1500 different ways to configure the space inside the car to name just two attributes? While it is true, sales in the US haven't fared as well. How much can be attributed to the poor reporting here? For example, to this day Consumer Reports regurgitate its 2013 road test results on the first year 500L, complaining about its ride and seats, without mentioning that the car had its seats redesigned in 2015 along with its suspension settings, plus received a conventional automatic transmission. That amounts to misinformation and an injustice to its readers and the general public which quotes CU as some kind of bible. Then there are sites where people with absolutely no or very limited experience with the cars spew off the wall comments. If you want to know the "truth," most Fiat owners seldom come to these sites to counterpoint the haters because they don't want to subject themselves to nonsense, plus frankly, they are too busy enjoying their cars. If you are a car enthusiast and love cars, you need to try an Italian car for yourself and see what the rest of the world outside the US knows.

    • Akcaptruth Akcaptruth on Jul 13, 2017

      We own a 2015 500L with the Aisan 6speed automatic, Easy trim level (mid) with Panoramic, Beats Audio, Uconnect with Sat Radio and Navigation. We like the car a lot. I'm a design professional, and I like to say the styling is refreshingly without guile. It's akin to a Boston Terrier's looks: more endearing than pretty -- in a way that's not immediately obvious and that grows over time. What we like most is the interior packaging, and as a Mini-MPV, that's the raison detre of these cars. You sit high and chair-like, visibility is super, and the tall, reconfigurable, rear-sliding-tumbling-reclining-s60/40 seats are handy. When we go out to dinner with another couple, they often remark at how roomy the rear seating is. It's a very large interior car for its contained footprint. The car is fairly saturated with small, thoughtful details: the fuel tank is capless, it has a great 'intelligent" blinker setup (easy to use and six blinks); the lights have a "coming home" feature you can activate in 30 second increments, the Uconnect is full-featured and a breeze to use, bluetooth streaming is a cinch, the seats have pneumatic lumber support, etc. Our lifetime FUELLY mpg average is 28.5, and we've had no mechanical problems. The interior plastics are bargain basement, the front brakes are grabby, the handling is minivan-like. We have four 500L's in a four block area of where we live, we talk regularly, and we all are pretty satisfied.

  • MJAB MJAB on Jul 18, 2017

    Total production of FCA Serbia plant was for 2016 was 85k vehicles. The registrations for European Union countries + Switzerland, Norway and Iceland were 2016 82,150 2015 85,357 2014 94,114 2013 74,536 2012 10,494 Note: these are registrations of new vehicles, not sales declared by manufacturer as is done in U.S.A.. Registrations in European Union and other countries in Europe are accounted by public authorities and are that the data published monthly. May 25 started the production of restyled model. The powertrains used is NAFTA Fiat 500L is not sold in Europe and it was developed and tuned in U.S.A..

  • SilverCoupe I should be the potential audience for this (current A5 owner, considering an S5 in the future), but I can't say it excites me. I have never liked the vertical bars in the grilles of sporting Mercedes models, for one thing. The interior doesn't speak to me either.I would be more likely to consider a BMW 4 Series, though not the current version with the double Edsel grille. Still, I suppose it would be worth a look when the time comes to replace my current vehicle.
  • Verbal Can we expect this model to help M-B improve on finishing 29th out of 30 brands in CR's recent reliability survey?
  • Lou_BC I kept wanted to say "Book 'Em Danno" while looking at the photos of the Mercury but this car predate Hawaii Five - O by 3 years.
  • 28-Cars-Later Someone finally remembered what a coupe is over at MBZ.
  • 28-Cars-Later Pay more, get less!