Fiat Chrysler gears up to help dealers trim costs

March 10
11:36 PM 2016

Fiat Chrysler Automobiles (FCA) has charted a business plan for its Fiat dealers. The new business plan helps Fiat dealers reduce operational costs and restore faith in the brand. FCA advised dealers to close down money losing stand-alone dealership outlets.

New plan for dealers also aims at attracting more number of customers towards Fiat brand. FCA is also advising Fiat dealers to run dealership with Chrysler, Dodge, Jeep and Ram dealerships so that consolidation will reduce costs of running dealership outlets. Majority of Fiat dealers also operate Chrysler, Dodge, Jeep and Ram nearby. 

USA Today reports that dealers as part of the new business plan will also be allowed to display Fiat cars at those other stores. Gualberto Ranieri, spokesperson at Fiat Chrysler Automobiles, said the new plan would save costs on running dealership outlets. Upon implementation, the new plan is expected to save $180,000 annually at a dealer showroom, which sells 15 new Fiat a month. 

Dealers can save significantly in third-party vendor expenses. FCA is also focusing on simplifying the Fiat lineup. The Automobile major is also planning to reduce the number Fiat trim levels so that price overlap among nameplates can also be limited. 

The Wall Street Journal (WSJ) further adds that dealers are also advised by Fiat Chrysler Automobiles to close down standalone dealership outlets. FCA's CEO Sergio Marchionne is keen on promoting the struggling Fiat brand in the US market by changing strategy for dealers. The automobile major has also given more control over the brand to dealers. Fiat showrooms are now allowed to sell Chrysler, Ram, Jeep and Dodge brands as well. If Fiat dealers want to continue their showrooms as separate outlets for Fiat, the will get financial subsidy of $1,000 as rent assistance for every car sold.

Latest business strategy as viewed by several dealers attending a recent meeting in Detroit, that it's a significant reversal in Chief Executive Sergio Marchionne's plan for the Fiat brand. Fiat is known for small, fuel-efficient cars with a European flare. US dealers were earlier asked to present a detailed business plan on how to run separate showrooms. 

With 200 retail outlets across the US, Fiat sold 42,410 vehicles in 2015 giving an average of 18 per month at an outlet. If a dealer closes down his retail outlet as advised by Fiat Chrysler Automobiles, he wouldn't get any reimbursement. FCA is also promising that Alfa Romeo brand cars will soon be rolled out. Majority of dealers have already started combining their back-office operations to reduce costs, as reported by Market Watch.

At a time, when gasoline prices were high, Fiat Chrysler Automobiles introduced Fiat brand. The demand for small cars was very good when gasoline prices were ruling high. With gasoline prices hovering lower, US consumers are going for crossovers and SUVs. 

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