What Will Help Fiat's Sluggish Momentum In The United States?
It appears to be a tale of two brands. While Chrysler sales have been doing very well lately, sales of its stable-mate Fiat (OTC: FIATY) have been struggling.
The company said its Jeep and Dodge Ram brands posted gains last month, compared to June 2013 – with sales of the Jeep brand jumping 28 percent and the Ram truck up by 14 percent.
And while Fiat sales were reportedly up 11 percent in June, its best sales month ever, overall sales volume remains lower-than-expected. Fiat also took a big hit recently in the J.D. Power initial quality automobile survey – coming in last among the 32 brands surveyed.
The Los Angeles Times says Fiat owners in the J.D. Power survey reported nearly double the industry average of problems per vehicle.
Tim Fleming, an analyst with Kelley Blue Book, says that, on the surface, Fiat looks to be having a good year – with brand sales through June up 15.5 percent, following the launch of the second major model in Fiat's U.S. line-up, the 500L.
“However, there are a couple of worrying signs for the Fiat brand, namely with a rise in incentive spend and the average days in inventory,” Fleming told Benzinga.
“We have Fiat’s average days in inventory at 131 days in 2014, up from 109 in the first half of 2013. Meanwhile, incentive spend has jumped 14 percent this year, and reached its highest level ever for the Fiat brand in June.”
Fleming believes it's hard to imagine more sales growth for the 500 at this point without a subsequent increase in incentives, which he says will end up “potentially devaluing the model and brand in the long term.”
“New products in a wider array of segments would appear to be the best way to grow the Fiat brand in America,” he concludes, “but the big question is whether this is worth the expense with other established brands, such as Chrysler, Dodge and Jeep all in the portfolio.”
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