Bark's Bites: When Fiats Attack (the Bottom Line of Dealerships)

Mark "Bark M." Baruth
by Mark "Bark M." Baruth

“See that sign over there?” The weathered, weary general manager of the dealer I was visiting that day pointed in the direction of a shiny, silver and red beacon with the word “FIAT” in bold capital letters. He spat the still-burning cigarette out of his mouth and stomped on it in disgust. “Cost me $27,000. They gave me the franchise for free, but they made me pay for that damn sign.”

“How many Fiats have you sold since you put it up?” The exasperated look he shot me after I asked that question told me that perhaps I shouldn’t have ventured into that territory.

One. One freaking car. I’d have to sell about 40 of the damn things just to pay for the sign, much less make any money.” He gestured toward the line of Fiat 500Xs that were crowding his lot. “You wanna take a couple with ya? I’ll make you a hell of a deal.”

Even though I’m actually rather fond of the little crossover, I’m not fond enough to actually buy one. Apparently, nobody else is either. And that’s a problem for FCA dealers.

If you’re playing along at home, you’ll realize that 27,000 divided by 40 is 675. I verified with the GM that he wasn’t just spouting that number out of frustration — he said that’s all the money there is to be made, on average, with the Fiat line of product. And after reviewing the data on Edmunds.com, he may have been generous with his estimations. Even if a customer comes in and pays MSRP with no questions asked, there’s less than $200 of room between the invoice price and sticker. Factor in holdback and you might be in the $600-700 range, but as you can see in the screenshot of Edmunds data at the top of the page, the true market value for these cars is considerably under invoice minus holdback.

That is, of course, assuming anybody actually wants to buy one. “Interested in a Ram 1500? How about this little pansy car over here instead?” One of the sales guys mimed a common customer interaction. “A Jeep Wrangler? What about this Fiat? Nah, man, I don’t think so.” All of the Fiats on this lot were 2017 MY, because the GM had no interest in ordering any 2018 inventory.

My eyes drifted over to a black Abarth 124 Spider that was hiding behind the row of 500x inventory. Like the rest of the Fiats on the ground there, it was a 2017 model, with a sticker price of $31,500 or so. I’ve driven the Abarth before, and I’ve found it to be about 90 percent of an ND Miata when it comes to driving enjoyment — the exhaust note is unpleasant, but the rest of the car is quite delightful. “What about that one?”

The GM laughed. “Hell, I’ll give you that one. Tired of looking at it.” I checked the invoice on that one, and there’s a little bit more profit — about $600 plus holdback. Unfortunately, no matter how good the deal might be, I have no need for a two-seater convertible in my life. I shared my feedback with the GM, and he agreed. “We’ll probably end up writing it down and then trying to sell it as a used car down the road. Instead of losing money, we’ll make a little bit. If we can even sell it that way.”

FCA finds itself in a bit of a pickle — it doesn’t have a Chrysler or Dodge small car anymore, and nobody is interested in the small Italian Jobs pushed by Fiat. I imagine somebody in Auburn Hills thought that the Fiat lineup would fill the gap left by the Dart and the 200. Insert a Donald Trump “WRONG” gif here.

Fiat sales in the U.S. are down 44 percent, year over year, making it the worst-selling non-exotic brand in America. Fiat volume lags behind such volume makes as… Genesis. Even brother Alfa outsells Fiat. The current Fiat on-hand supply is the highest of any manufacturer, at a whopping 161 days — that’s right, Fiat doesn’t have to ship another car to dealers until September 20th and they’ll be just fine.

We could do a Fiat Death Watch series here, but why? It’s like doing a Death Watch on your 104-year-old great-grandmother. We all know it’s coming, right (Of course, it’s coming for all of us someday If FCA really cared about dealers at all, it would stop punishing them with these mini floorplan anchors, and they’d look at bringing back a passenger car — any passenger car — that Chrysler and Dodge dealers could actually sell.

In the meantime, if you actually are interested in a Fiat, give your local dealer a call. My guess is he’ll beg you to take one off his hands at a significant loss.

Mark "Bark M." Baruth
Mark "Bark M." Baruth

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  • WildcatMatt WildcatMatt on May 02, 2018

    Regarding the notion of having Fiat fulfill the small-car segment for Dodge and Chrysler... I am not nearly as learned or well-read as I would like to be regarding the death spiral of Willys/Hudson/Nash/Packard/Studebaker in the '50s, the biggest takeaway I have is that there seems to be a critical mass when it comes to volume brands, a point below which consumer confidence in a brand evaporates, sufficient economy of scale to remain competitive is lost, and the business ceases to be viable. I suppose "mindshare" is applicable here. That Studebaker soldiered on as a zombie brand as long as it did selling handfuls of cars is remarkable, given that people seem to have thought it was a dead brand walking for nearly a decade before the plug was pulled. This echoes in the attempts to launch the Valiant and Comet (and Scion, if you like) as standalone quasi-brands which were folded back into their parents once it was clear the market wasn't going to punish the main brand for offering a compact and the cost of separate promotion wasn't necessary. As much as people like to dig up the "Fix It Again, Tony" chestnut for Fiat, some of that is lack of confidence in the product. But a lot of that is a lack of confidence in the brand itself, as in, "I haven't seen many of these around, are they any good?" without an answer. Fiat may have reached critical mass briefly, but hasn't sustained it. This has ramifications to FCA if one goes up a level in scope. As the model count at Dodge and Chrysler dwindles, they are at risk of losing critical mass even if the Pacifica and Ram 1500 sell well. This is the argument against GM continuing to sell one Pontiac model at Chevy dealers, for example. Some of this is by design, largely eschewing brand engineering and eliminating overlap. That's all well and good, but that requires the consumer to consider all FCA models together in that mindshare consideration -- effectively having to think of the Fiat 500 as a Dodge 500. This would be easier to do if Fiat was an ongoing established brand in the US, but it's not. Which sets up an interesting question: would things be any different if FCA had put Plymouth Neon badges on the exact same car?

  • Scuzimi Scuzimi on Jun 01, 2018

    I hold Marchionne responsible for the crash of Faits in the USA... They did not bring all the great euro spec models to the USA, they didn't support their USA dealers very well. When I take my X to the Chrysler dealership they tell me might be a few days until we can get a Fiat tech in. Well that inspires folks to buy one. MINI Cooper started off with a better plan and have done fairly well though they also didn't import all they offered in Europe either. I owned 3 until MINI's got stupid fuggly. I own a Fiat X, now that the Chrysler dealership has the trans working well I am really enjoying the car. Loved my Abarth but hated the seats. I'm looking into who might want to start a class action suit against FCA with me if the stop selling in the usa. I bought my Fiats because Sergio claimed he would never build a bad car on 60 Minutes. I've had great luck with my Fiats but I know others haven't and the dealerships are not the greatest. If they pull out of the USA I'm left with a worthless vehicle which I bought thinking FCA would still be selling beyond 6 years, so now I may own a Saturn.

  • VoGhost It's funny, until CDK raises their prices to cover the cost. And then the stealerships do even more stealing because they're certainly not taking the hit - why do you think they make all those political donations? So who pays in the end?
  • VoGhost I was talking today to a guy who pulled up in an '86 Camry. Said it ran like a top, got 30 mpg, the AC was ice cold and everywhere he goes, people ask to buy it. He seemed happy.
  • VoGhost TL:DL. Younger people less racist.
  • VoGhost None of the commenters who won't buy from China think twice about getting their oil from Saudi Arabia. They may even be filling up with Venezuelan or Russian petroleum, for all they know.
  • Johnny ringo In a word, no-the usual Chinese business model is to invite foreign companies into China as a joint venture, insist on a 49% share in the company-along with technology transfer and then push the foreign partner out and take control. And now with all the sabre rattling going on between the United States and China over Taiwan and the South China Sea and the possibility of a war, I'm not giving any of my money to the Chinese.
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