Fiat Chrysler Cuts Prices on Fiat 500s, Offers Dealers Support
November 23 2016 - 10:10AM
Dow Jones News
Fiat Chrysler Automobiles NV, scrambling to keep its lineup of
small European city cars afloat in a U.S. market drawn to pickup
trucks and sport-utility vehicles, is slashing prices on its lineup
of Fiat 500 vehicles and offering dealers financial support.
Part of a wider shake-up of the Fiat brand, sticker prices that
are lowered as much as $3,900 are central to an attempt to
jump-start a six-year effort to make the unit viable in the U.S.
Bloated inventories have required deep incentives, a practice that
erodes resale values.
Fiat's move is part of a broader retreat in the market for small
passenger cars. A viable segment when gasoline prices are high, the
class of vehicles including the 500, Daimler AG's Smart and Toyota
Motor Corp.'s Yaris is struggling.
Last month, more than 60% of U.S. auto sales were pickups, SUVs
or crossover SUV wagons, an all-time high mark for light trucks as
a percentage of total light-vehicle sales. Fiat Chrysler Chief
Executive Sergio Marchionne has responded to this trend, killing
off the Dodge Dart and Chrysler 200 passenger cars to focus on
beefy Jeep SUVs and Ram pickup trucks.
Mr. Marchionne is retooling Fiat's focus as well, moving it from
elite to accessible. When the lineup launched the beginning of the
decade, dealers were required present detailed agendas on how they
would build separate "salons" before the business was awarded—now
they are stuck with sleepy showrooms that cost $1 million to
complete.
Fiat has about 200 stores in the U.S. The company in March
agreed to support dealers who wanted to sell Fiats alongside
Chrysler, Ram, Jeep and Dodge vehicles rather than continue
operating the brand as a separate unit. Dealers who continue to
operate a separate showroom receive $1,000 in "rent assistance" for
every car sold.
Fiat had once hoped to rival BMW AG's Mini Cooper brand, which
commanded high price tags and amassed a cultlike following when it
was revived in the U.S. market.
The Fiat 500, a two-door city car, will be reduced 12% to
$14,995 in 2017, down from $16,995. That price is much more
comparable to General Motors Co.'s $13,000 Chevrolet Spark and Ford
Motor Co's Fiesta, priced at $14,090. The 2017 Fiat Pop, a
subcompact car, starts at $14,995, also $2,000 less than the 2016
model.
The Fiat 500c Pop convertible will cost $16,490 in 2017,
compared with $20,395 in 2016, a nearly $4,000 drop in price. The
pricing changes were first reported by Automotive News.
Fiat's cars are underperforming other Fiat Chrysler brands,
including Jeep. Jeep's compact Renegade SUV launched in 2015, for
instance, has about three times as many buyers in the U.S. through
October as the entire Fiat brand.
The average sales incentive on a Fiat sold in October exceeded
$5,000, according to Autodata Corp., compared with a $3,500
industry average. Dealers have 128 days' of unsold Fiat supply on
their lots as of Oct. 31, according to WardsAuto.com, far exceeding
industry norms.
The brand "added content, eliminated overlapping trim levels and
established attractive price points in order to aggressively
compete in the car segments," Bryan Zvibleman, a Fiat Chrysler
spokesman, said.
The changes come as Fiat is attempting to expand and push the
brand upmarket and widen appeal. It is currently launching the 2017
Fiat 124 Spider, a pricey convertible classic Italian styling that
pays homage to the original 124 Spider introduced 50 years ago in
Italy. It also recently started selling the 500X, a bigger version
of the 500 aimed at pulling in buyers looking for more utility.
Write to Adrienne Roberts at adrienne.roberts@wsj.com
(END) Dow Jones Newswires
November 23, 2016 09:55 ET (14:55 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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