Bank on It: Glut of Unsold Cars Pushes Fiat Chrysler Into Bargain Mode

Steph Willems
by Steph Willems
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bank on it glut of unsold cars pushes fiat chrysler into bargain mode

Earlier this fall, word arose that Fiat Chrysler had resurrected a practice from the bad old days of the company — a sales bank of unallocated vehicles churned out by over-productive factories and pushed on dealers with little use for them. The company claimed otherwise, saying that its new “predictive analytics” system was simply in the process of being refined to better guide the flow of certain models and configurations to dealers.

With 2019 nearly at an end, unordered inventory is once again on the rise, Bloomberg reports. And not by any small amount, either. In response, FCA is reportedly pulling out all the stops to get these vehicles into consumers’ hands before 2020.

The initial sales bank report claimed FCA had 40,000 unassigned vehicles in the U.S., which the automaker claimed it whittled down to 5,000. The analytics system was working, it claimed, bringing total inventory down by 140,000 vehicles in the third quarter.

However, that pool of unordered vehicles swelled to roughly 70,000 at the beginning of December, a source told Bloomberg, and internal marketing documents reveal the automaker is prepared to play Let’s Make a Deal to clear them out.

From Bloomberg:

The company says the build-up is the result of a year-old system to streamline manufacturing by using data analytics to forecast demand, which can cause supply to wax and wane. But it’s also leading to internal strains, with some employees expressing frustration that the cars produced don’t match market preferences, according to the conference call and people with knowledge of the matter.

The magnitude of discounts Fiat Chrysler is resorting to in order to coax dealers to take on the vehicles sends a troubling signal for the automaker’s most important region. Spending on incentives impinges on earnings, and the company is almost entirely reliant on the money it’s making in North America. The situation also shows the challenges automakers face when adopting new technology to overhaul entrenched practices.

While the unordered vehicle pool has shrunk markedly since the start of the month, there’s little time left to clear the remaining pile before the end of the month. An internal marketing email from November showed FCA’s willingness to pursue employee pricing to move metal, as well as targeted incentives for certain models. A December 11th conference call with sales staff painted a picture of a company with the sales pedal to the floor; it showed an all-hands-on-deck situation, and many dealers expressed frustration with the idea of taking on inventory they didn’t want.

In some cases, it’s not that the model isn’t popular — just the configuration. One dealer was heard on the call complaining about the number of unassigned Ram HD Big Horn models with optional 20-inch wheels, a sales exec told Bloomberg. The dealer’s customers preferred stock 18-inchers.

In a bid to lower its bloated inventory, FCA reportedly put a limit on dealer orders this month. If you’ve got spare time over the holidays, and you’re in the market, you might check to see if FCA’s desperation can benefit your personal fortunes.

[Image: Fiat Chrysler Automobiles]

Steph Willems
Steph Willems

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  • RedRocket RedRocket on Dec 23, 2019

    It can't be the old Chrysler sales bank unless half the vehicles in it are painted a metallic green of some shade.

  • ChevyIIfan ChevyIIfan on Jan 02, 2020

    I have been HD truck shopping for a while now and saw tons of Bighorn models with the 20" wheels. I too preferred the 18s for both future tire costs and taller sidewalls. I took advantage of their employee pricing + discounts to get almost $9K off MSRP of a new RAM 2500 HD gasser 3 weeks ago.

  • Lorenzo A union in itself doesn't mean failure, collective bargaining would mean failure.
  • Ajla Why did pedestrian fatalities hit their nadir in 2009 and overall road fatalities hit their lowest since 1949 in 2011? Sedans were more popular back then but a lot of 300hp trucks and SUVs were on the road starting around 2000. And the sedans weren't getting smaller and slower either. The correlation between the the size and power of the fleet with more road deaths seems to be a more recent occurrence.
  • Jeff_M It's either a three on the tree OR it's an automatic. It ain't both.
  • Lorenzo I'm all in favor of using software and automation to BUILD cars, but keep that junk off my instrument panel, especially the software enabled interactive junk. Just give me the knobs and switches so I can control the vehicle, with no interconnectivity of any kind.
  • MaintenanceCosts Modern cars detach people from their speed too much. The combination of tall ride height, super-effective sound insulation, massive power, and electronic aids makes people quite unaware of just how much kinetic energy is nominally under their control while they watch a movie on their phone with one hand and eat a Quarter Pounder with the other. I think that is the primary reason we are seeing an uptick in speed-related fatalities, especially among people NOT in cars.With that said, I don't think Americans have proven responsible enough to have unlimited speed in cars. Although I'd hate it, I still would support limiters that kick in at 10 over in the city and 20 over on the freeway, because I think they would save more than enough lives to be worth the pain.