February 26, 2021

The Fiat 500 Hopes for a Rebirth in the U.S. Market

Fiat owns Chrysler, which it bought as part of Chrysler’s government-sponsored bankruptcy two years ago. Now Fiat is using its Chrysler foothold in this country to sell one of its own cars — the Fiat 500 — for the first time since 1983, when it officially left the market.

Lucky for Fiat, few Americans seem to remember Fiat or its past reputation for low quality, which sent sales plunging from a high of 100,511 in 1975 to 14,113 in 1982.

The company’s new “500” hatchback is being welcomed, in the words of one analyst, as a “fashion statement” among many new car buyers. Last month, the teeny car, whose trim lines include “Pop” and “Lounge,” essentially matched the sales of its chief competition, the Mini Cooper.

Fiat’s 101st dealership — the carmaker calls them “studios” and many are nestled in fashionable shopping districts rather than on sprawling suburban lots — opened on Wednesday in Miami, and the full network of 130 across the country is expected to be in operation by year’s end. The 500 also will be in the spotlight at the New York Fashion Week next week, when a red-and-green-striped Gucci version will be unveiled.

“As a new vehicle, it seems to me the launch would have to be viewed as a success,” Jeremy Anwyl, the chief executive of the automotive research Web site Edmunds.com, said. “The big challenge for the 500 is staying competitive.” He added: “Fashion tends to be ephemeral — it’s fickle. People move on.”

For the moment, at least, the 500 is the center of attention in the industry’s diminutive segment at a time when high gas prices and consumers’ interest in downsizing have turned small cars into big sellers. Fiat predicts sales of small cars will double in volume by 2014, and it hopes to capitalize in a way that Chrysler, which specializes in the larger end of the market, could not on its own.

“It’s an exceedingly well-built car — very functional, fun to drive and very roomy,” said Paul Locigno, a 63-year-old retired consultant in Virginia, who bought a 500 this spring, when he and his wife were looking for something smaller and less thirsty than their pickup truck. “I get a lot of gawkers on the road, people coming up to you asking what it is.”

The 500 might be novel to many Americans, but it has been a fixture in Europe since 1957. The version available to North American drivers, built in Mexico with engines from Michigan, was altered with their tastes in mind. Changes include a stronger suspension, a climate control system suited for more extreme temperatures, and the option of an automatic transmission.

“We didn’t just ship a car over that was successful in Europe,” said the head of Fiat in North America, Laura Soave, a first-generation Italian-American whose family has a photograph of her standing on the hood of a 500 at the age of 3.

Bringing the Fiat brand to the United States with a single model that sells for less than $19,000 on average represents a big bet for the company’s chief executive, Sergio Marchionne, as well as for dealers, who were asked to spend considerably to build separate showrooms for a car with unknown potential.

Even with the early excitement, there have been problems. Filling in Fiat’s dealership network has taken longer than the company anticipated, and sales in the early going fell short of expectations. Shares of Fiat dropped in Italy recently after Ms. Soave acknowledged that full-year sales in North America would come in below the company’s goal of 50,000; its totals through July were about 8,000 in the United States and fewer than 4,000 in Canada.

But many of the new Fiat dealers predict the kinks will be worked out. Dealers, most of whom also sell the four domestic brands in Chrysler’s stable, report numerous 500 buyers have traded in cars from Toyota, Honda, Mini, Volkswagen and even foreign luxury brands like Lexus.

“They’re doing a lot of things right, and Sergio is a phenomenal car guy,” said Rick Case, who opened a Fiat studio on July 1 in his former Smart car showroom near Fort Lauderdale, Fla. “What he’s done with Chrysler, most people consider it a miracle.”

Mr. Case’s store sold 58 of the 500 models in its first month, more than any other dealer nationwide, and he expects to consistently sell about 100 a month starting next year, which he said would make for a comfortably profitable business.

Mr. Case has an impressive track record for signing on with up-and-coming makers of small, fuel-efficient cars, and was among the first in this country to sell Toyotas, Hondas and Hyundais. He approached Fiat because he sensed similar potential, though he concedes it will never produce the volume of Hyundai, whose sales in the United States topped half a million last year.

“A lot of people are being drawn to it because it’s cute, because it’s fuel-efficient, because it’s a fun car,” he said.

Those attributes are bringing in buyers that Chrysler has historically struggled to attract. “This is a customer that they haven’t seen in a long time,” said Ms. Soave, the Fiat executive.

In addition to the hatchback and convertible on sale now, dealers will have a high-powered “Abarth” and an electric version of the 500 next year. Fiat is also planning a second, slightly larger model in the years ahead, but has not given a specific timeframe.

Fiat has worked to attract male drivers in the United States, with a “sport” version that offers more aggressive performance and styling. Men account for 64 percent of Fiat 500 buyers in North America but only 30 percent in Europe, where no sport trim is available. Fifty-seven percent of buyers here have chosen the sport trim, and most of those cars have come equipped with manual transmission, despite Americans’ overwhelming preference for automatics.

Ms. Soave said buyers tend to be either young or old, with fewer in their 40s and 50s, the age group where most mainstream brands are strongest. Among the strongest markets for Fiat has been Texas, a state whose penchant for brawny trucks would seem to make for a tough sell of a car less than 12 feet long.

“We don’t all own oil wells and swimming pools here in Texas,” said Nyle Maxwell, who opened Fiat of Austin in March and was the brand’s top-selling dealer in May and June. His staff sells the 500 from a storefront in the Domain, a fashionable outdoor mall anchored by Neiman Marcus, and serves customers from his Chrysler-Dodge-Jeep-Ram store five miles away.

“We’re selling as many convertibles as we can get our hands on,” Mr. Maxwell said. “The halo it will create should help the other brands as well. It’s got a lot of upside.”

Article source: http://feeds.nytimes.com/click.phdo?i=4756b0e08d0d448516565aab62db560d

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