By on December 20, 2019

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]

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48 Comments on “Bank on It: Glut of Unsold Cars Pushes Fiat Chrysler Into Bargain Mode...”


  • avatar
    ToddAtlasF1

    They have all these cars because they thought it was advantageous to run their factory even without any demand. Their solution is to limit dealer orders for cars that are in demand. This doesn’t seem like a particularly sound practice.

  • avatar
    FreedMike

    Any info on which models were over-produced?

    • 0 avatar
      R Henry

      @FreedMike

      I was just looking at my local Dodge dealer’s website. V6 Chargers seem to be heavily discounted, along with all the Chrysler 300s. I would be happy to help FCA out by purchasing one, but I have a kid in college….notgonnahappen.com

      • 0 avatar
        FreedMike

        I hear that.

        I just sent my kid off to college a couple of months ago, and she got her first grades back. Let’s just say she apparently had a good time. And she’s on an academic scholarship.

        (Scowls)

        I think it’s karma for me doing my damnedest to re-enact the movie “Up in Smoke” for my first two years at college.

        • 0 avatar
          R Henry

          Thankfully, my son is doing is part–is on the Dean’s list. Regardless, there will be no shiny new car in my garage until after cap and gown day!

          –RE: Up in Smoke. Early in that film those two drive down Pacific Coast Highway through Malibu in their ’64 Impala. If you ever in SoCal, the spot is here: https://goo.gl/maps/hgwMhKFviwJPATYFA
          …not far from where I hang out.

          • 0 avatar
            FreedMike

            Good on your kid for doing that. I think I just trusted my daughter would continue her high school academic habits. Hopefully she gets it back together – otherwise she may end up going to school here in town and living with me, which she is ***not*** gonna like very much.

        • 0 avatar
          Nick_515

          Mike,

          give your kid some time. more importantly, make sure you understand what’s causing her underperformance. motivation is not always the culprit. most of all… don’t tie her self-worth to her performance. i am employed on the other side of this story. we want kids to have the space to learn to succeed, not get crushed by their early “failure.”

          I’m not saying that’s what you meant. I’m saying that succeeding in college is complicated, may not happen overnight, and is not solely tied to motivation.

          • 0 avatar
            gasser

            A very fine analysis of kids trying to adjust to new surroundings, new friends and new academic challenges.

          • 0 avatar
            FreedMike

            Good take, Nick – we already talked about it. She’s motivated as hell; she just hasn’t been away from home before. Mostly she was afraid I’d be mad at her, which I wasn’t – mostly concerned.

            We’ll see how it goes. She took an interim online class (History of Rock and Roll…LOL) and she’s acing that one. It’ll turn out it how turns out. Thanks.

          • 0 avatar
            Arthur Dailey

            @Nick: Well said and I am sure that your students benefit from that attitude.

            My guiding principle when teaching is to treat our students the same way that I hope their instructors treat/have treated my children.

    • 0 avatar
      dal20402

      Looks from the local deals like the only FCA product I’d buy at the moment, the Pacifica Hybrid, is *not* one of them.

      • 0 avatar
        rudiger

        As one might imagine with good ole, bungling Chrysler, the one product that actually had some demand, the Pacifica Hybrid, was delayed for months due to lack of (unspecified) parts and only recently began production. In fact, those few 2020 Pacfica Hybrids that are finally hitting dealer lots are actually being tagged with ADMs up to an additional $4k!

        • 0 avatar
          dal20402

          So that explains it. All the inventory around here is still in transit and the prices I’m seeing are MSRP – ~$2k, which is basically as expensive as a Chrysler minivan will ever be.

          My wife has trouble with the idea of identifying as a van owner, but loves them every time we rent one. Occasionally I wonder how she would react if she came home one day and there was a PacHy sitting on the curb in place of the Highlander, all signed and delivered. I probably won’t do it, but I know we’re giving up some practicality as a result (although probably gaining reliability).

          • 0 avatar
            rudiger

            Don’t tell her it’s a minivan; it’s a shuttlecraft. :)

            And, yeah, the hybrid has had some issues versus a more reliable Toyota. The main one that’s been popping up are dead/dying, smallish 12V batteries on leftover, prior year hybrids that have been sitting on dealer lots for long periods. It’s to the point that requiring a new 12V battery on a leftover vehicle is a requirement of the deal.

            There are compromises, too. The hybrid loses the Stow ‘n Go second row seats (that’s where they put the battery) and the hybrid can’t tow. But that’s offset by the stellar fuel economy (it’s actually possible to use ‘zero’ gas for long periods if you can get by on 34 EV miles at a time).

            And if you have a high enough tax liability, there’s the $7500 federal income tax credit, bringing the ultimate payout on a hybrid virtually the same as the non-hybrid, even with the non-hybrid Pacifica discounts and incentives.

          • 0 avatar
            dal20402

            I’d take the more comfortable second-row seats in the Hybrid every day and twice on Sunday over the Stow ‘N’ Go torture chairs. My second row does get used by adults from time to time.

            At the prices that were available last time I shopped for PacHys seriously, the hybrid was actually cheaper than the gas-only version after the tax credit.

          • 0 avatar
            rudiger

            @dal: In that case, if you can find one on a dealer lot, you need to take your wife on a test drive. She may actually find out that the ‘un-minivan’ vibe of the Pacific Hybrid isn’t so bad.

            But they are big vehicles so the Limited trim (the only one where you can get the Advanced Safety Tech Package 360 camera) is strongly recommended.

    • 0 avatar
      Lorenzo

      If you look at quarterly sales, the bulk have to be Jeeps, Rams, and vans: IOW trucks. There’s only the 300 Chrysler, and the Charger/Challenger are few in number. Most of the Dodge brand vehicles are the Durango and Journey SUVs.

  • avatar
    dukeisduke

    I wonder if PSA will go along with this sales bank nonsense, or put the kibosh on it?

  • avatar
    jh26036

    Rental car companies will just scoop them up

    • 0 avatar
      FreedMike

      And that’s different from how it works now with FCA…because…?

      • 0 avatar

        Because it no longer is FCA. Now it is PSA which is in process of learning how to do business in États-Unis.

        • 0 avatar
          conundrum

          The agreement to merge was signed just yesterday, and you think PSA is running FCA already? Loony thinking. There’s no chance PSA is going to tell FCA how to run US operations, because it’s you know, a merger, not a PSA dictatorship. And PSA knows nothing about the US market anyway. The Italians aren’t going to stand to attention following French orders – it’ll be joint decisions for quite a while.

          Here in Canada you can get 25% off FCA vehicles in the latest attempt to gain market share by giving their stuff away. TV ads blare the deals. The most-off purchaser who looks at no other criteria is having night sweats computing all the giganto savings they could enjoy. Or as C/D said 55 years ago when they promoted Dan Gurney for President: buy 10,000 of this $4.95 poster for $2.95 and save enough to put your kid through college!

          • 0 avatar
            ToolGuy

            “And PSA knows nothing about the US market anyway.”

            Carlos Tavares might know more about the US market than you suspect.

            [The login process just worked perfectly for me, first time out, for the first time ever.]

  • avatar
    Vulpine

    Interesting that Ford and GM are offering larger discounts than Ram on commercials in my area; larger by $8,000 and more.

    • 0 avatar
      Art Vandelay

      The F150 is now the oldest design out there so not really surprising. The GM though is telling.

    • 0 avatar
      SD 328I

      Not in my area, I got my new Rebel for $39,000, which had a MSRP of over $54,000. That’s $13,500 off MSRP!

      What those factory discount commercials aren’t showing is the internal dealership discounts which can add up to be much more.

      Even with the now old F150, I couldn’t come close to the discounts I got with RAM.

  • avatar
    65corvair

    My local small city dealer sells Ford and FC products. The Ford side is worse the FC side with 50 out of 101 Fords being 2019 models. Still the FC side had a couple of 2018 Jeeps and two out of two Fiats are 2018’s.

  • avatar
    Carrera

    Dealers around me have very few Classics in stock..almost none. Only a few Express quad cabs. No Classic crew cabs, no Classic Big Horns. Not sure what the situation is with the new Ram.

  • avatar
    kosmo

    $20,000 off a Durango R/T would get me down to the lot.

    • 0 avatar
      Lorenzo

      Yes, but will you buy? Here in San Diego, a RT with a $48K MSRP is selling for just under $37k. A RWD V6 SXT with a $32k MSRP is selling for $26k. If you find a RT for $20k under MSRP, you’ll know how desperate FCA and its dealers are.

  • avatar
    gasser

    “If you build it…they will come”…..WRONG

    • 0 avatar
      Lorenzo

      The proper term is “If you build it at the right price point with easy financing…they will come”. Somebody was messing with production specs to goose average transaction prices.

  • avatar
    spookiness

    “…internal marketing documents reveal the automaker is prepared to play Let’s Make a Deal to clear them out.”

    I am the only one old enough to get the following punchline from Mopar days past?

    “Did someone say….deal?”

    I couldn’t get that out of my head the whole time I was reading this piece.

  • avatar
    Arthur Dailey

    Well the Chrysler/Dodge website for Canada lists the following prices:
    300 starting at $42k.
    Caravan starting at $25,696 or $72 per week for 8 years.
    Ram 1500 Classic SXT Plus at $32K.

    I would appreciate being able to place a Ram 1500 Classic Quad Cab 4×4 or a Caravan in my driveway.

    But those prices don’t seem to be ‘advantageous’ for those vehicles.

    And do I really want to spend 3 hours butting heads with another sales manager, at my ‘time of life’? I was probably negotiating car purchases before any of the sales/marketing people in most dealerships were born. Didn’t mind it then, hate it now.

    And this new site design is the worst yet. Too hard to sign in. Am unable to click and link to the comments I want to read. The ‘back’ arrow rarely works. Just awful regarding ease of use.

  • avatar

    My local small-town not part of a mega dealer conglomerate is beginning to double stack them.
    My limited experience in Japan and Europe shows that most dealers have a few cars on the lot, mostly used, and new is to order.

    This, as we know, isn’t our system, where a few sales managers spec least objectionable builds, so we get a lot of silver/automatics/no sport packages/with the luxury package. Forget that loss leader, or any actual shade of a color. This also destroys comparison shopping. I realized this when I was shopping Cadillac (I got better, thanks !). There are never two identically built. For any car, you will almost never find “on the lot” what you build on line.

    I’d think that what they learn from the on line builds would be useful.

    Part of the problem might be FCA ordered too many parts the customers didn’t take, not necessarily an attempt to boost prices.

  • avatar
    thx_zetec

    I live in Phoenix AZ metro area. At least one local dealer has adverts for v6 chargers at about 22k this would be 9k off the 31k list. This is your last chance to get a rwd 4door sedan w/ about 300 HP.

  • avatar
    RedRocket

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

  • avatar
    ChevyIIfan

    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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