Fiat's US performance could be warning against reintroducing Peugeot
The performance of Fiat, the Italian small-car brand stripped to just one vehicle in the United States, might be good reason for the new Stellantis NV to reconsider introducing Peugeots to the American market.
Fiat's U.S. sales plummeted 53% in 2020 after the brand stopped selling the 500 minicar. Now, it has nixed the 500L compact car and the 124 Spider roadster. That leaves just the 500X crossover for the 2021 model year. It is a lineup reflecting U.S. consumer tastes that skew sharply to SUVs and trucks, experts say, as well as the challenges for brands to enter the highly competitive market.
"It’s difficult to break into the U.S. market, whether you're trying to bring a Peugeot, a Lucid (electric vehicle), a Karma (EV)," said Stephanie Brinley, analyst for information provider IHS Markit Ltd. "Even Toyota and Honda that are now strong players, it took time to get there."
The history of European mass-market brands like Fiat in the United States offers a cautionary tale for Stellantis, the looming merger between Fiat Chrysler Automobiles NV and French rival Groupe PSA, maker of Peugeot. That brand ceased operations in the U.S. and Canada in 1991 due to poor sales.
Today, Peugeot is a higher-end mainstream marque selling city cars, family cars, SUVs and mid-size trucks, mostly in Europe. It's been the intention of PSA CEO Carlos Tavares, who will lead Stellantis as chief executive, to return Peugeot to the U.S. over 10 years by 2026. A global automaker, he believes, must have a presence in North America.
PSA's merger with FCA, however, will provide Stellantis with a dealer footprint as well as familiar and popular brands like Ram pickups and Jeep SUVs to sell that may render plans to bring Peugeot to the U.S. unnecessary for now.
As FCA and PSA have worked toward receiving necessary antitrust and shareholder approval, Tavares has said PSA legally must continue its efforts to come to the United States. He has not said whether that will continue once the companies merge.
"You've scaled up here in the U.S. with FCA," Philippe Houchois, a London-based analyst for investment firm Jefferies Group LLC, said of the tie-up. "It releases the pressure on PSA opening a U.S. presence organically. It's not top of mind in priorities."
Conversely, Fiat left the U.S. market after sales plunged from a high of more than 100,000 cars in 1975 to fewer than 15,000 in 1982. Fiat sold fewer than 5,000 in 2020. When Fiat SpA took a major share in Chrysler LLC, it was the ambition of its late CEO, Sergio Marchionne, to return the brand to the U.S. market. It came back in 2011 to the enthusiasm of fans.
"Fiat Club America was founded like in the '70s, early '80s, and most of the different chapters were started during that time shortly after Fiat left the U.S. market," said Simone Bonino, a native of Turin, Italy, who grew up in a Fiat driven by his father and who is now president of the fiat club's Detroit chapter. "For many, many years, we were in front and carrying the torch as an orphan brand.
"I don’t think that we will go away even if Fiat stops selling cars. Fiats have never been the loudest or the most luxurious cars. It’s that passion for driving. It's a very affordable, approachable brand."
The Nyle Maxwell dealership in Austin, Texas, was the second U.S. location to open, said Brent Rayfield, managing partner of the retailer that now is among the top Fiat sellers in the country. It also sells Alfa Romeos.
"The brand is not going to define our dealership," Rayfield told The Detroit News about the slimmer portfolio. "At the end of the day, we have to adapt to the change when a brand is not doing as well as it needs to do."
That means doubling down on its service department as well as used sales, he said. For Fiat enthusiasts, however, the dealership is ordering as many of the 500Xs as it can. The 500X's sales nationwide dropped 43% year-over-year in 2020.
"Fiat is in the small car segment," Rayfield said. "They're not as popular, especially in Texas. It's all about the trucks and big SUVs. As for the future of Fiat — who knows?"
Matt Davis, head of Fiat USA product and sales operations, does, and he says there indeed is a future for the brand here. The 500X's segment is up 140% in the past five years while the sectors in which the 500L and 124 compete shrunk by half.
"Fiat is part of a 'house of brands,'" Davis said in a statement. "More than 80 percent of our dealer network sells other FCA vehicles (Chrysler, Jeep, Dodge, Ram), so the Fiat 500X complements the current FCA product portfolio."
Most of the remaining 20% of Fiat dealers, he added, share a showroom floor with Alfa Romeo, the company's complementary premium Italian brand.
But most Americans do not own small cars for their entire life, analyst Brinley noted. While other brands such as Ford or Chevrolet have options to transition to larger vehicles as consumers have families and growing needs for space, Fiat's niche like BMW's Mini face the challenge of retaining buyers.
"You have such different personalities from a Fiat 500 to a Jeep Compass or a Grand Cherokee," Brinley said. "They don’t feel the same. It’s not a natural transition. You don't go from a Fiat 500 to a Dodge Charger because you had two kids. It's part of the issues Fiat has struggled with."
An additional challenge is Fiat's vehicles are assembled and shipped from overseas. The Spider is made in Japan in a partnership with Mazda Motor Corp. and can take months to a year to arrive, dealers said. Fiat assembles the 500L in Serbia. The 500X is produced with the Jeep Renegade subcompact SUV in Italy.
Dealers and Fiat drivers said they would like to see the return of the 500. The company in March debuted a new electric model for the European market, where small cars sell better. It also introduced the hybrid Panda city car in January 2020.
"We sold more 500s than anything," said Joseph Belmonte, general sales manager of Towbin Fiat Alfa Romeo in Las Vegas. An electric 500 "opens up the doors to the customer base segment that is growing. It would give you something people want, but can't always afford — an electric vehicle for the masses."
Fiat is examining its options, and the company is evaluating the 500 for North America, Fiat's Davis said. Meanwhile, Stellantis could provide an opportunity for the brand to reposition and fill into other segments by using Citroën, Opel and Peugeot architectures, said Jeff Schuster, president of global vehicle forecasting for LMC Automotive Ltd.
"Having just one vehicle under the lineup likely is the beginning of the end," he said. "That can change with a merger like this."
There is room for new brands to find success. Alfa Romeo still sold less than 20,000 vehicles in the United States last year, but it was the only FCA to grow sales — by 2%. It is refreshing the Giulia sedan and Stelvio SUV and introducing two electrified vehicles in larger segments. The company has increased advertising efforts for Alfa in the past couple of years, dealers said.
As for Fiat, "there’s a place for the brand if they want it," said Bill Golling, owner of several Metro Detroit dealerships, including Fiat and Alfa Romeo ones in Birmingham and Bloomfield Hills. "Each brand has to have whatever its brand identity has. I’m not sure they know how to handle small cars in America. After the merger, I am sure they may take a different look at things in the lineup and the products and platforms."