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

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 Autofocus.ca and the founder and former editor of GoodCarBadCar.net. Follow on Twitter @timcaincars.