Chrysler Group is sharply outperforming the market this year, has charted a healthy course to profitability and has paid back its government loans.
But the small, peppy Fiat 500, which is Europe's No. 2-selling minicar after the Panda, hasn't kept the same pace.
The 500 is well behind the 50,000-unit annual target once envisioned by Fiat-Chrysler CEO Sergio Marchionne. Since sales began in March, only 15,826 were sold through October. And last month 29 of Fiat's 130 U.S. stores didn't sell a single one.
Internal Chrysler Group documents obtained by Automotive News Europe sister publication Automotive News show that, based on current selling rates, Fiat had roughly a half-year supply of Fiat 500 coupes and convertibles on Nov. 1. That's 13,730 units, almost as many as have been sold since March.
In an effort to get things moving, Fiat began offering a $500 cash rebate this month.
But the move comes too late to stave off production cutbacks. This month, because of slack demand, Chrysler laid off or reassigned 65 workers who build the engine for the Fiat 500 in Dundee, Michigan.
Laura Soave, a former marketing executive with both Ford and Volkswagen, who became head of the Fiat brand in North America in March 2010, left Fiat on Monday. She was replaced by Timothy Kuniskis.
The launch of the 500 was a key part of Marchionne's plan to reintroduce the Fiat brand to North America and give Chrysler Group a minicar. When Marchionne took over Chrysler Group in 2009, the smallest, most fuel-efficient vehicles the domestic automaker had were the compact "triplets" -- the Jeep Compass and Patriot and Dodge Caliber, none of which got more than 30 mpg on the highway, and all of which sold poorly.
Chrysler hired Jennifer Lopez to pitch the 500 in a series of national TV commercials and asked dealers to build expensive separate showrooms to reintroduce Fiat in North America.