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.
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]
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.
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- Dave M. Although the effective takeover by Daimler is pooped upon, this is one they got right. I wasn't a fan of the LHs, mostly due to reported mechanical, NVH and build quality issues, but I though Chrysler hit it out of the park with the LXs. The other hyped release that year was the Ford Five Hundred, which, while a well-built car with superior interior space, couldn't hold a candle to the 300.
- Art Vandelay I always liked those last FWD 300's. Been ages since I've seen one on the road though. Lots of time in the RWD ones as rentals. No complaints whatsoever.
- Cardave5150 I've had 2 different 300's - an '08 300SRT and an '18 300C. Loved them both a LOT, although, by the time I had the second one, I wasn't altogether thrilled with the image of 300's out on the street, as projected by the 3rd or 4th buyers of the cars.I always thought that the car looked a little stubby behind the rear wheels - something that an extra 3-4" in the trunk area would have greatly helped.When the 300 was first launched, there were invitation-only meet-and-greets at the dealerships, reminding me of the old days when new model-year launches were HUGE. At my local dealer, they were all in formalwear (tuxes and elegant dresses) with a nice spread of food. They gave out crystal medallions of the 300 in a sweet little velvet box (I've got mine around the house somewhere). I talked to a sales guy for about 5 minutes before I asked if we could take one of the cars out (a 300C with the 5.7 Hemi). He acted like he'd been waiting all evening for someone to ask that - we jumped in the car and went out - that thing, for the time, seemed to fly.Corey - when it comes time for it, don't forget to mention the slightly-stretched wheelbase 300 (I think it was the 300L??). I've never found one for sale (not that I've looked THAT hard), as they only built them for a couple of years.
- Jkross22 "I’m doing more for the planet by continuing to drive my vehicle than buying a new one for strictly frivolous reasons."It's not possible to repeat this too much.
- Jeff S Got to give credit to Chrysler for putting the 300 as a rear wheel drive back on the market. This will be a future classic.