Fiat 500 Abarth for USA – another commercial flop?

by autoindustrie | November 17, 2011 10:10 pm

Various automotive blogs on the great Interweb of disinformation were quick to pan the Fiat 500, saying that the product is nothing other than a fashion accessory and sales have dropped well below its peak in Aug 2011 (3,106 units for Fiat vs 3,109 units for MINI for the same month). Yes the Fiat 500 is nothing more than a fashion accessory. But so is the ultra successful MINI, so is nearly every other high end premium car. Nobody ever buys a premium product because they needed one, people buy a premium product because they believed in a story, or as Seth Godin say[1], they want to tell themselves a lie. All of us buy into lies or tell ourselves a lie in our daily purchase decisions. That buying this makes us feel better, makes our lives better. You really believe in BMW’s ultimate driving machine mantra and superiority of rear-wheel drive ethos? Doesn’t anyone realize the BMW sings the same superior handling dynamics of a MINI, but the story is framed and told differently (i.e. more fashion, urban chic, more unisex) and people still buy into to the story while conveniently forgetting that the MINI is a front-wheel drive, the exact same point that BMW disses about its competitors (i.e. Audi and mainstream cars) The most successful products are those that tell a very good story, both to its buyers and about the buyers.

When CEO Sergio Marchionne announced Fiat’s relaunch in USA (Fiat pulled out of USA in 1983), he set an ambitious target of selling 50,000 units of the Fiat 500 in North America (USA and Canada). As of October 2011, Fiat only sold 21,380 in North America. In comparison, BMW sold 45,644 units of MINI branded vehicles in USA alone last year. However, keep in mind that BMW sells the MINI via a very well established network of BMW dealers, all of them very well trained in selling premium, highly emotional products. Fiat in comparison, has to start from scratch, given the fact that Fiat’s American sister brand Chrysler sits at the opposite end of the scale, unlike BMW and MINI. As of October 2011, Fiat has less than 60 dealers in USA. To put that into perspective, even Porsche has 198 dealers (as of October 2011) in USA, let alone a comparatively lower-end brand like MINI.

As usual Marchionne’s controversial blend of charisma and ego sometimes gets the better of him and this time he obviously bit more than he can chew. This month, Fiat USA’s Global Engine Manufacturing Alliance Plant in Dundee, Michigan had to be idled as Fiat struggles with a 6 month long inventory period. The logic is simple, without having barely enough dealers how does one expect to shift more cars than BMW’s MINI? In USA, the Fiat 500 starts at $15,500 while the MINI starts at $20,200. For such an emotional product, the price elasticity factor is very high and shaving a couple of thousand dollars off the MSRP is not going to help much. The marketing guys at BMW are some of the best in the business. Where they are sitting at in the market is about the most optimal position you can get.

Two months ago, Fiat hired MTV superstar Jennifer Lopez and highly acclaimed MTV director Paul Hunter to shoot two MTV themed commercials featuring Jeniffer Lopez’s latest singles, My World[2] and Papi[3], for the Fiat 500 Cabrio. At this month’s Los Angeles Motor Show, Fiat launched its high performance Abarth sub-brand. The Abarth 500 comes with a turbocharged 1.4-liter Multi-Air engine, producing 160 hpa at 5,500 rpm and 230Nm torque between 2,500 and 4,000 rpm. It’s a more frisky version than the 135 hp version in Europe. Prices will be announced later in the month.

But again, simple logic will you that without a sufficiently wide channels, even the best product, coupled with the best promo campaign cannot shift enough cars out from the showroom in sufficient quantity.

Watch a very sexy ad for the Fiat 500 Abarth in our other post here[4].

Source URL: http://www.motorindustry.org/2011/11/17/fiat-500-abarth-usa-sales-commercial-flop/

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