September 21, 2011
Shock sets in for Fiat dealers as the reality of Sergio’s “plan” hits home.
By Peter M. De Lorenzo
(Posted 9/19, 2:00 p.m.) Detroit. I’d really hate to be a Fiat dealer here in the U.S. right about now. After all, Sergio Marchionne, the espresso-swilling genius CEO atop of the Fiat-Chrysler empire − or Chrysler-Fiat depending on just how much you want to keep telling yourself that it isn’t an Italian-owned company − promised these dealers that investing $1 to $2.5 million in new facilities to align with Sergio’s “vision” for the brand would pay off handsomely, hinting strongly at a plethora of new models from Fiat and Alfa Romeo that would begin rolling into showrooms in 2012. But 2012 has slipped to “maybe” 2013-1/2 and the announcement that Alfa Romeo vehicles wouldn’t be coming here before mid-to-late 2014 or thereabouts has sent shockwaves through Fiat dealers all over the country.
Remember, these are the dealers who bought into Sergio’s promises hook, line and sinker, and now they’re confused, devastated, pissed-off, apoplectic, etc., etc., because now they’re basically looking at 24-30 months of having to sell Fiat 500s – and just Fiat 500s – while sitting on their ball-busting brick-and-mortar investments. No wonder that the relationship between Auburn Hills and the Fiat dealer body has grown chilly, if not downright icy.
It might be a good time to review what has happened to Fiat in recent months, and why the ultimate responsibility for the looming train wreck – and underwhelming performance in the market – can be traced right back to Sergio’s doorstep.
Some key points to consider in all of this?
First of all, the Fiat 500 launch, hell, the whole idea of Fiat surfacing again in this country was botched by Sergio and his team from Day One. And botched is a kind word, I might add. These guys have over-promised and under-delivered every step of the way. And there’s just flat-out no excuse for it.
In fact there never was a real launch for Fiat, because between Sergio’s wildly optimistic promises and predictions that we’d be swimming in Fiats last early spring, and the reality of not having enough dealers and a woefully lackluster marketing strategy is the fact that the car has only recently showed up in the market. And despite gushing comments from a few dealers about how they’re flying off of the lots, the reality is that the 500 is delivering less than half of the volume that Marchionne promised way back when.
(Just in case you forgot or didn’t really know in the first place, Sergio’s “number” that he deigned would be an appropriate one for the Fiat 500 after he gazed at his Murano crystal ball? 6600 units a month. The real live “over the curb” number right now? 3,000 or so a month. Uh, that’s not just a discrepancy, that’s a stupendous miss.)
Compounding the nuts and bolts problems of the Fiat launch – the lack of product, lack of dealers, Sergio’s wild-assed pronouncements, etc., etc., – was the fact that the so-called Fiat management team, led by now ex-CEO Laura Soave, was understaffed and ill-equipped for the task at hand. Egregiously so, I might add.
Soave made the fatal mistake of teaming-up with a pal, Michael D’Antonio, who runs a little Michigan-based promotion agency called Impatto, and giving him the creative assignment for the marketing launch of the 500. And with that one move she virtually assured herself that the launch would be an unmitigated disaster. To say that D’Antonio was ill-qualified for the assignment doesn’t even begin to get into the abject stupidity, relentless egomaniacal behavior and rampant unprofessionalism that he brings (or brought, more on this in a minute) to the table every day.
The result? Total disaster, to put it kindly. The work was amateurish, ill-conceived and relentlessly tedious with not a cohesive idea to be found anywhere. And the crowning achievement of this match made in Hell? The absolutely disastrous new spot with JLo and the Fiat 500C, quite possibly the worst automotive spot of the last decade, hands down. And just in case you didn’t see its debut on NFL football over the weekend when it ran repeatedly – and believe me with each successive pass it got even worse – you can watch it here.
And after you do, know this: D’Antonio and Impatto have not only been finally given the boot, to make matters worse Fiat-Chrysler auditors are combing the financial records of the relationship to see if there were any improprieties, which is a heaping, steaming bowl of Not Good by any measure.
Ms. Soave has subsequently been supplanted by a couple of veteran Chrysler executives, as the Auburn Hills bunch tries to sort through the fact that selling Fiat 500s isn’t exactly going to sustain its dealers, especially the ones who laid out serious cash after listening to Sergio give them the pep talk about teamwork (like some bad rendition of Robert DeNiro’s speech in “The Untouchables,” no doubt).
Right now the internal marketing situation at Fiat is chaotic and it’s no wonder why. When the only thing they have going at the moment is a ridiculously nonsensical and embarrassing TV commercial that has JLo driving around in a Fiat 500C (as if) with no rhyme or reason whatsoever attached to it other than the fact it makes her and the car look positively stupid, yeah well, you got nothin’.
Fiat marketers are scrambling to get new agency partners involved, which will eventually help, but the fact remains that the Fiat 500 will quickly become a niche-afterthought in this market because there’s really nothing there there.
Is it a cute car? Absolutely. But in this market cute doesn’t count for much and for very long either. The 500 isn’t the kind of car Fiat dealers expected to wring profit out of. It was to be an introduction to the brand for U.S. consumers in preparation for the good stuff that was right around the corner from Fiat and more importantly Alfa Romeo. It’s no wonder then that there are legions of pissed-off Fiat dealers out there sitting in their $1 million+ showrooms wondering what the hell they’re going to do to sustain themselves with that “nice” little car because there are no new vehicles on the horizon to add to their showroom mix.
The Bottom Line?
Here we go again with the real costs associated with Sergio’s “I command all that I survey” egomaniacal management style. He’s the King of Micromanaging and when it appears to be working the stick-and-ball media fall all over themselves in heaping gushing praise on him.
But what about when it isn’t working? Is it really deserved?
Not when it comes to Fiat it isn’t. Sergio and his minions took their eyes off of the ball when it came to the Fiat launch and it shows. After painting a nirvana-like picture for dealers and getting them to pony-up a ton to meet Sergio’s “vision” for the brand, the cars were late, the marketing was amateurish and now, the promise of a showroom full of interesting Fiat and Alfa Romeo vehicles is down the road. Well down the road.
I have listened time and time again to Marchionne as he made wildly optimistic pronouncements on how successful his “plan” for Fiat would be in this market and how he would bring the Alfa Romeo brand back to full song here as well. I even distinctly remember him saying that he could easily sell 75,000 Alfas here once he put the full measure of his genius behind it.
Well, that plan has come undone, and with a resounding thud too. It’s more like 36,000 Fiat 500s a year, if they’re lucky, and no Alfa Romeos in sight. That’s not going to keep Fiat dealers in business for the next two-and-one-half years, certainly not enough to keep the debt on the notes that came with those brand spanking new showrooms in play at any rate.
Yes, Sergio’s over-promise and under-deliver micromanaging routine has grown old. Just ask the Fiat dealers who dropped big dough on his “vision.”
As for the rest of the Fiat-Chrysler enterprise, do you think there are other things falling through the cracks because Marchionne has spread himself so thin that he can’t allow himself to admit that he doesn’t have a handle on things?
Count on it.
And that’s the High-Octane Truth for this week.
See another live episode of "Autoline After Hours" with hosts John McElroy, from Autoline Detroit, and Peter De Lorenzo, The Autoextremist, and guests this Thursday evening, at 7:00PM EDT at www.autolinedetroit.tv.
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