Fiat Gains Traction in U.S. After First-Year Skid

Now that Fiat is the majority stakeholder in Chrysler Group, it appears the Italian auto maker is in the U.S. market for the long haul. But the fact that Fiat has been absent from U.S. showrooms since 1983 can pose challenges.

For older Americans, nostalgia for the Fiats of their youth often is tempered with bitter memories, such as those expressed by TV talk-show Jay Leno, a longtime car enthusiast.

“Fiat sold cars here without Americanizing them,” he says on his website, jaylenogarage.com. “In that sense, they were not very good cars.”

On the other hand, a Generation Yer with an above-average vocabulary might just as soon define “fiat” as a decree or proclamation rather than as an automobile.

“Before Chrysler and Fiat became partners, I didn’t know what a Fiat was,” says 27-year-old Mike Golling of Golling Fiat, a dealership, or “studio” as the auto maker prefers to call it, in Birmingham, MI. “That’s the case for most people in my age bracket, unless they’re a die-hard car person.”

With the 2011 U.S. introduction of the reborn Fiat 500, the A-segment entry that was launched in Italy in 2007 and named 2008 European Car of the Year, Fiat is looking to its current dealers to help dispel bad memories, attract new customers and increase awareness in general.

Fiat undershot its 2011 U.S. sales goal of 50,000 cars, moving just 19,769 units, including daily rentals, according to WardsAuto data. It was “incredibly naive” to have assumed such high first-year volume in the U.S., Fiat-Chrysler CEO Sergio Marchionne said earlier this year.

Things are looking better now. Through May, Fiat delivered 16,702 vehicles in the U.S., a 431% increase compared with like-2011. It was the largest year-over-year sales gain of any Chrysler Group brand.

Some industry observers are cautiously impressed. “Mini did a year of guerrilla marketing before they sold a single car, and they launched in a relatively strong economy (in 2002),” says Jim Hall, president of 2953 Analytics in Birmingham. “Without a year’s build-up, and in a much weaker economy, Fiat has done quite well.”

Chrysler says Fiat continues to build up the brand through advertising, “experiential” events, social-media campaigns and product placement. “As a result of these efforts, our awareness increased 500% during the last six months,” says Tim Kuniskis, head of the Fiat brand in North America.

For some dealerships, such as Fiat of North Miami, which hosted a high-fashion-themed grand opening in April, customer awareness of the Fiat name is a non-issue.

“There’s a very large Latin community in South Florida, and in all their home countries they’re familiar with the brand,” says studio director James McKee. “To most people in the Latin community, this car is what the Volkswagen Beetle was in America. Everyone in that community has a story about a Cinquecento (500)  just like Americans have stories about the Beetle.”

Argentina-based Belcastro Group, a major importer of Fiats into South America, owns Fiat of North Miami.

McKee says he has been selling 500s “right and left” since the store opened, even buying cars from other dealers until he could increase his inventory. His goal is to sell up to 100 units a month, “or as many cars as we can.”

Dealers play a critical role in the success of the brand and in building sales momentum, Kuniskis says. “We currently have 142 Fiat studios open in 39 states across the U.S., and I have personally met with every dealer to ensure that they have what they need to continue growing the brand.

“They are the Fiat ambassadors in the market, and therefore it is essential that they offer our customers a first-class buying and service experience.”

Fiat has assigned regional brand representatives with whom dealers can discuss ways to improve operations.

“Our data show that more than 80% of Fiat 500 owners say they would recommend the brand to family and friends, which means that our dealers are doing the right things for their markets,” Kuniskis says.

Fiat and its dealers rely heavily on social media to connect with potential customers. The 500’s Facebook page has 503,000 friends and is adding about 20,000 a month. The brand has more than 17,000 followers on Twitter and has logged more than 11,000 YouTube views.

“Part of the factory model is to get the customer to become friends on Facebook after the sale,” says McKee. “We take a picture and post it on Facebook and tag them in the picture. It shows up on their page, and their friends see it.”

At Golling Fiat, “We do a lot of TV, but my main focus lately is maximizing the Internet to bring the traffic in,” Mike Golling says. “We use platforms like Google Adwords to get into the searches. If somebody searches ‘Mini Cooper,’ we’ve had great success in having our ad show up.”

Golling opened its Fiat store adjacent to its larger Chrysler-Dodge-Jeep-Ram dealership in Bloomfield Hills, MI, in January 2011 as an interim location, then made a “significant” investment in the nearby Birmingham studio.

While hoping to maintain the original dealership for “as long as we can,” Golling says the standalone location makes sense for Fiat.

“The separate atmosphere, separate sales team and separate management does the brand justice and makes sure we offer the best customer experience possible,” he says of the store selling 25 to 30 cars a month.

While social media is important, Fiat dealers also must put the 500 in the right physical environment, says Joe Lescota, a professor and retiring chairman of the Automotive Marketing Dept. at Northwood University in Midland, MI.

“Is the car at concerts, outdoor events, ‘cause’ events?” he says. “Are they at snowboarding and skateboarding events?  We are in an efficient marketplace, which means the consumer has access to a ton of information. Go where the young people are actually going. It’s about gaining an audience.”

For Fiat of Kearney Mesa in San Diego, CA, that audience can be found at farmers’ markets and other local events.

“Whenever the Italian gourmet food trucks go to an event where there’s a lot of people, we go along,” says dealership Sales Manager Curt Flory. “We gather a lot of interest that way.”

Flory also sponsors the local Fiat-Alfa Romeo club and makes his facilities available for their meetings.

Although Fiat sales are improving, many believe the auto maker simply needs more products beyond the 500 model. “Dealers need a good deal of positive investment,” says analyst Hall. “That’s hard to do with just a 3-door hatchback.”

Kuniskis expects deliveries to improve with the sporty high-performance Fiat 500 Abarth, which went on sale in April. Also in the works is an electric version.

It’s entirely possible for a new brand to overcome a slow start, Lescota says, citing the struggles Hyundai originally saw before it became a popular nameplate.

“Look at how it reinvented itself,” he says of the South Korean brand. “It’s hotter than a firecracker. The company recognized its flaws, what it had and didn’t have, and said, ‘Let’s go after it,’ and did.”

But it takes a dealer network to help raise a brand.  

“The dealers are always part of that effort,” Lescota says. “I don’t care what a manufacturer makes, good, bad or indifferent. Unless that dealer supports that product, it’s not going to make it.”