Fiat failed to spark a small-car revival
Iconic brand falls victim to buyers’ shifting tastes
When the Fiat 500 made its American debut in 2012, the two-door vehicle and its Italian siblings were billed as the saving grace for an American automaker that had failed to make compelling small cars on its own.
But today, Fiat models, including newer offerings such as the 500X subcompact SUV and the 124 Spider convertible, are few and far between on American roadways.
Those vehicles have fallen far short of expectations for a brand that was once billed as Chrysler’s ticket to a small-car renaissance in America following its near liquidation in 2009.
Today, their maker – Fiat Chrysler Automobiles – is thriving, thanks largely to its Jeep SUVs and Ram trucks. But the company’s Fiat brand is withering away.
“You have a lot of things working against it,” said Tom Libby, auto analyst for IHS Markit, a data and information provider. “The brand doesn’t have any products in the categories that are thriving.”
Not a ‘sensible purchase’
Brought back to the U.S. in the wake of Italian automaker Fiat’s 2009 deal to take control of bankrupt Chrysler as part of a federal bailout, the Fiat brand has encountered a series of obstacles.
Plunging interest in passenger cars, a
lack of body style variety, a reputation for poor quality and a general lack of consumer awareness have collectively undermined the Italian brand.
After hitting a high point in 2014, Fiat’s U.S. vehicle sales plummeted 66% over the next four years to 15,521 in 2018.
One prospective buyer was Philadelphia resident Candace Gallagher, who was recently shopping for a new car to use in her job as a real estate agent.
Gallagher liked the design of the Fiat 500 and 500L wagon but found their tiny size impractical after test driving several models. She ended up buying a slightly larger Hyundai Veloster.
“I really do love the way Fiats look, but it didn’t seem like a sensible purchase,” she said.
Ultimately, she wanted something that had more space for clients and other items she has to ferry around town for her job, like the occasional vanity countertop.
“The whole allure of a Fiat is that it’s tiny,” she said. “You can’t fit much in there.”
The peak
Fiat’s U.S. market share peaked at 0.29% in 2014, representing fewer than 1 in 300 vehicles sold nationwide, according to IHS Markit. That was the last year that gasoline topped $3 per gallon nationwide, according to AAA.
But in the following years, gas prices plunged, and Americans fell madly in love with crossovers and SUVs. Small cars fell out of favor, driving Fiat’s U.S. market share down to 0.09% in 2018, or fewer than 1 in 1,000 vehicles sold nationwide.
The SUV boom has prompted Fiat Chrysler, General Motors and Ford Motor to cancel most of their passenger cars. Chrysler, for example, already cut the Chrysler 200 passenger car. Could Fiat be next?
It wouldn’t be the first time in recent memory that a global automaker killed a small-car brand that simply wasn’t working:
❚ Toyota killed Scion in 2016 after sales of the brand’s small cars faded.
❚ Mercedes-Benz is discontinuing sales of the Smart brand in the U.S.
The Fiat, Dodge and Chrysler brands collectively will get 25% of the company’s global investment capital in the five-year period from 2018 through 2022, according to a company presentation last June.
But Fiat is sold primarily in Europe, which may be where the investments are concentrated. And that plan was designed by former CEO and Fiat revival architect Sergio Marchionne, who died in July.
Fiat spokesman Bryan Zvibleman declined to comment beyond the 2018 presentation, which teased several new vehicles but did not indicate whether they would be sold in the U.S.
Fiat Chrysler “has not indicated that the Fiat brand will be dropped from the U.S., but the limited range and declining sales over time can make justifying support for Fiat an increasingly difficult task,” IHS Markit auto analyst Stephanie Brinley said.
Deals aren’t working
The brand has tried to juice sales by offering heavy discounts, Krebs said. For example, a 2018 Fiat 500X could be had in April with up to $5,750 off, according to Autotrader. “And yet those rich incentives are not moving the needle for Fiat,” Krebs said.
To be sure, Fiat has had high points in the U.S. When gas prices spiked in 2014, Fiat sales topped out at 46,121.
Another promising sign was a series of marketing wins such as a 2015 Super Bowl commercial showing the Fiat 500X ingesting a Viagra-like pill – a spot that placed third in USA TODAY’s annual Ad Meter rankings.
“Bigger, more powerful and ready for action,” the narrator says of the 500X.