Fiat Chrysler Dealers Cry Foul Over Inventory Glut

Steph Willems
by Steph Willems

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]

Steph Willems
Steph Willems

More by Steph Willems

Comments
Join the conversation
2 of 20 comments
  • ToolGuy ToolGuy on Nov 12, 2019

    "Who stole the cookies from the cookie jar? Reid stole the cookies from the cookie jar Who me? Yes you Couldn't be Then who?"

  • Namesakeone Namesakeone on Nov 13, 2019

    Didn't Chrysler learn from the late 1970s pre-Iacocca era when they had a sales bank, and built thousands of unsold, sloppily-built cars to fill Detroit parking lots? Oh, wait, this isn't Chrysler anymore, it's FCA.

  • Bd2 If they let me and the boyz roll around naked in their dealership I'll buy a Chinese car.
  • THX1136 I would not 'knowingly' purchase a Chinese built or brand. I am somewhat skeptical of actual build quality. What I've seen in other Chinese made products show them to be of low quality/poor longevity. They are quite good at 'copying' a design/product, but often they appear to take shortcuts by using less reliable materials and/or parts. And , yes, I know that is not exclusive to Chinese products. When I was younger 'made in Japan' was synonymous with poor quality (check John Entwistle's tune 'Made in Japan' out for a smile). This is not true today as much of Japan's output is considered very favorably and, in some product types, to be of superior quality. I tend to equate the same notion today for things 'made in China'.
  • Mike Beranek No, but I'm for a world where everyone, everywhere buys cars (and everything else) that are sourced and assembled regionally. Shipping big heavy things all over the planet is not a solution.
  • Jeffrey No not for me at this time
  • El scotto Hmm, my VPN and security options have 12-month subscriptions. Car dealers are not accountable to anyone except the owner. Of course, the dealer principles are running around going "state of the art security!", "We need dedicated IT people!" For the next 12 months. The hackers can wait.
Next