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]
I spy great year end deals coming soon.
Stocking up for another UAW strike?
Takes some chutzpah to get sued over shady conduct and then promptly re-engage in the same conduct.
Clearly the punishment wasn’t enough then.
There is a parking lot a few miles from my house that is FILLED with overstock from the local Nissan, Honda, Buick mega-store. They try to hide them using that green construction tarp around the fence but its obvious the collection isn’t moving.
Nope. This is DIFFERENT shady conduct. Pipeline stuffing is entirely different from fudging sales numbers, primarily in the fact that it’s legal. Plus, it delays the inevitable factory shutdowns until after the UAW contract is renewed, which is probably as important as legality.
“We’re producing pre-specificationed vehicles against predicted demand so the right vehicles are available when dealers need them,”
Oh nooooo! More corporate speak.
I’ve to go to the restroom to vomit.
Came to say this. And he’s the corporate communications officer! He can’t communicate!
“We’re introducing specific vehicles to our dealers to meet predicted demand.”
“We’re creating inventory to help our dealers adequately to meet predicted demand.”
Or whatever. But not that hot dumpster fire of gobbledy-gook.
Translation:
Sports cars sell better in the Spring
Trucks sell better in the fall.
FCA = Dodge testing. RAM into production.
FCA sales look good, but they’re sales to dealers. The fact that dealers are complaining must mean FCA has shifted its inventory to dealers, and retail sales are worse than advertised.
A good part of FCA’s sales success has been lower prices and subprime financing. Either subprime borrowers or subprime lenders must be getting tapped out. In a fairly robust economy, that’s bad news for everybody.
what, did they re-hire Joachim “Just Joe, please” Eberhardt?
Sales Bank – is it 1978 all over again?
The car rental companies are smiling.
Inventory glut = strike insurance?
One data point, but my local FCA shop, a local store, has them stacked like cordwood up and down the slopes next to the parking lot, which is also full. They can’t hide the stock, they don’t have an auxiliary lot elsewhere….
In other news….prespecficationed ? Is that a word ?
Some dealers are run better than others. I used to live near the Mossy group of dealers, and looking at the inventories of their Nissan, Toyota and Ford stores would have had you thinking that all three were in trouble. That being said, if there are a reasonable number of Dodges in stock and an 85 day supply of Jeeps, then the overall average being an 101 day supply suggests that there are a huge number of RAMs and that Chryslers, Fiats, and Alfa Romeos may be painted to their lots.
It’s RAMs I bet. How do you think they beat Chevy 2nd quarter?
The quarterly sales numbers reported are retail/fleet deliveries. Wholesale units from factory to dealer inventory aren’t counted as sales in those reports.
“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?”
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.