Under the newly formed PSA-FCA merger, both automakers are planning to keep all their current brands alive in the future. While that’s good news, generally speaking, Fiat Chrysler Automobiles might face conflicts with its dealers as it has been producing more cars and trucks than the sellers want. A new report from Bloomberg shines more light on the current situation.
Speaking to four FCA dealers in the United States, “two of whom spoke on the condition they not be named,” the publication learned that at one point the automaker had created a nationwide stock of around 40,000 unordered vehicles firing tension with some of its retailers. This strategy is known in the automotive industry as a “sales bank” and is a decades-old trick to make dealers take delivery of cars they haven’t actually ordered.
FCA denied it has restarted a sales bank, saying it now has a new predictive production and delivery system in effect, which tries to better align the anticipated dealer orders with its supply chain and manufacturing plans. “We’re producing pre-specificationed vehicles against predicted demand so the right vehicles are available when dealers need them,” Niel Golightly, Fiat Chrysler’s global chief communications officer, commented. He also added that the new system has proved to be successful so far, as FCA has ended the third quarter of the year with as few as 1,000 cars in stock with no orders pending.
A research from Edmunds shows FCA is generally way above the industry average in terms of time its cars spend in dealer inventory before being sold. Dodge, Jeep, and Chrysler have relatively short stays at the showrooms, varying from 69 to 100 days, but Fiat and Alfa Romeo are struggling to sell fast, staying at the dealers for up to more than 180 days.