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.

  • Lorenzo Are they calling it a K4? That's a mountain in the Himalayas! Stick with names!
  • MaintenanceCosts It's going to have to go downmarket a bit not to step on the Land Cruiser's toes.
  • Lorenzo Since EVs don't come in for oil changes, their owners don't have their tires rotated regularly, something the dealers would have done. That's the biggest reason they need to buy a new set of tires sooner, not that EVs wear out tires appreciably faster.
  • THX1136 Always liked the Mustang though I've never owned one. I remember my 13 yo self grabbing some Ford literature that Oct which included the brochure for the Mustang. Using my youthful imagination I traced the 'centerfold' photo of the car AND extending the roof line back to turn it into a small wagon version. At the time I thought it would be a cool variant to offer. What was I thinking?!
  • GregLocock That's a bodge, not a solution. Your diff now has bits of broken off metal floating around in it.
Next