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Chrysler Group Fiat's US partner had hoped to sell up to 50,000 Mexican-built Fiat 500s in North America annually. So far, sales since March have barely topped 16,000, and were less than 2,000 in October.
The Fiat 500 also was expected to help pave the way for Chrysler to introduce other Fiat and Alfa Romeo models in the United States, according to Chrysler/Fiat chief executive officer Sergio Marchionne.
Disappointing sales for the 500 prompted Marchionne to replace Laura Soave, the North American head of Fiat for nearly two years, with Timothy Kuniskis, who served as marketing director for the Chrysler and Fiat brands.
"The Fiat 500 seems a competitive entry, but sales expectations have not been met," said Jeremy Anwyl with the automotive web site Edmunds.com.
"The expectations might have been too high to begin with but delays in rolling out Fiat dealers also hurt," Anwyl said.
Gualberto Ranieri, Chrysler Group's communications chief, said it took the company longer than expected to develop a dealer network.
Initially Chrysler hoped to promote the four-seat hatchback Fiat 500 in urban markets with a low-key campaign stressing event-style marketing over a broad television campaign.
As sales faltered, Chrysler began a more aggressive television advertising campaign featuring singer-actress Jennifer Lopez.
Joe Langley, senior analyst with LMC Automotive in Troy, Michigan, said Fiat's sales had actually peaked before it began the expensive television advertising campaign.
"Fiat also seemed rushed to get the 500 to market, despite marketing and distribution not being completely ready," Langley said.
The 500's "cute, iconic styling will only take it so far in the market once the 'fad' buyers fade," he said.
"Barring a more defined marketing message for the brand, Fiat faces difficulties in luring consumers away from established and well defined brands," Langley said.
The Fiat 500 was not designed for the US market, but instead simply placed there, said Alan Baum of Baum and Associates.
Baum added that problems launching the Fiat 500 have made life difficult for dealers, who have been asked to invest substantial sums in new showrooms.
"This will have continuing impact, because it is already hurting Alfa Romeo's re-launch" in the US market, Baum said.