How real is FCA’s growth in Europe?

fiat500x96The last 12 months have been extremely good for the European division of FCA. The car maker has been posting a continuous monthly growth and in many cases outpacing the industry’s average increase. The European car market is back to growth thanks in part to economic upturn and more confidence from consumers and all car makers. FCA is making use of this good trend by launching more products and becoming more aggressive commercially speaking. Its monthly sales continue to post double-digit growths, while more new cars are expected to hit the market in the coming months. However when looking closely at the results, it’s clear that there’s something wrong.

FCA 1During the first three months of this year Fiat Chrysler Automobiles has registered almost 231.000 units in the top 5 European markets – Germany, UK, Italy, France and Spain. That’s a shocking 17,4% more than the volume registered in the first quarter of 2015, and is for sure one of the best performances among the big players. Fiat brand and Jeep are the drivers of this growth thanks to their latest launches – the Fiat 500X and Jeep Renegade – which make part of the fastest growing segment in the region: SUVs. In terms of growth, the Italian-American manufacturer even beats its main rivals from Europe as VW Group from Germany, and PSA and Renault Group from France. FCA’s growth was almost 6 times higher than the one posted by VW Group, and more than double the one recorded by PSA.

FCA 2But looking into the detail, it’s clear that FCA is not really growing in a healthy way. They are now more dependent on the Italian market than before, with Italy counting for two-thirds of the total registered in the top 5 European markets. That’s quite a lot considering the numbers of its rivals, with VW German registrations counting for 48% of the total, and French figures counting for 47% of Renault Group total and 48% of PSA’s. The result is even worse for FCA when considering the evolution. The comparison between 2015-Q1 and 2016-Q1 shows that FCA is the only European car maker to increase its dependence on its home market, as VW reduced it from 49% in Jan-Mar 2015 to 48% one year later, while France sales remained at 47% and 48% of the total for Renault and PSA. One year ago, the Italian registrations counted for 62% of FCA total.

This means that the spectacular 17,4% gain posted by FCA during the first three months of this year is mostly explained by its Italian operations. It’s quite normal that the home market always represents a big part of sales of any company. At the end FCA is a well-known company in Italy with an important presence in Turin and in the south of the country. But the latest figures indicate that without its strong commercial campaign in Italy (there is a special offer for the Punto at 4.800 euro), the group wouldn’t have gained any market share in the four remaining markets. Excluding Italy, FCA’s market share in Germany, UK, France and Spain combined, would be 3,35% in 2016-Q1, the same result posted in 2015-Q1. When Italy is included, then its market share jumps from 7,37% in 2015-Q1 to 8,00% during the same period of this year.

FCA 3That’s certainly a bad result considering the fact that markets like Spain and the are also posting very positive results. Besides, VW diesel scandal has had a negative effect on its sales leaving more room for its competitors. In fact the German giant has seen its Top 5 European market share dropped from 23,55% in 2015-Q1 to 22,43% in 2016-Q1. The other problem is FCA’s strong and historical dependence on the 500 model, and the fact that this small car is now passing through its decline phase of its commercial cycle. Last year the Fiat 500 counted for 20,9% of FCA total registrations in Europe, and despite the introduction of its facelift in July 2015, the city-car keeps falling in the rankings. In 2016-Q1 the Fiat 500 registrations fell by 14% in the UK, and 5% in France, two important markets. Meanwhile the Fiat 500X and the Jeep Renegade keep gaining segment share but they have probably reached their sales peaks, leaving Jeep with no more new models to keep the outstanding growth posted in 2015.

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8 responses to “How real is FCA’s growth in Europe?

  1. Hi Juan. Good to hear from you again.

    While your point’s well-made, mefeels it’s just a rhythm thing vis-a-vis FCA’s only recent europe-market/brand push (since Marchionne had been entirely usa-centric through 2013/2014).

    The real test of whether FCA’s over-dependent on the italian market (which has rebounded much more than others, and which has a much higher proportion of private retail sales relative to say france, a greatly healthy thing)….

    …. will only be well-after the more-wider-european-market relvant models rollout fully, namely: the Tipo trio, the Alfa Giulia+Stelvio, the new Punto in 2017, the new Jeep Compass/c-suv plus the Fiat c-suv by 2017/18?

    Esp since executive leasing is such a large and growing share of many markets (eg., britain and Germany) and the 500 or even 500X/renegade are less than ideal for this vast segment of the market that fca has been near-absent-from for years.

    cheers

  2. They had some strong promotions in the italian market in January and February.
    The growth has been focused mainly on the italian market because the italian market is actually the market that also had the highest sales peak and is the one showing the fastest recovery in sold units. For example, VW also saw big sales increases in Italy which compensated declines in the UK and Germany for example.

    So I don’t share your pessimistic point of view. I think the sales growth will be sustainable because FCA is re-entering segments in which it hasn’t been present for a while. The Tipo is selling strongly in Italy and even in the rest of Europe and the hatch and station wagon will arrive in May and September. Therefore sales will keep increasing due to this release of models in segments in which it wasn’t present before.

    And then, there’s the release of the new C-SUVs from Jeep and Fiat for Q4/16 or Q1/17 and the Giulia, Levante, Stelvio, 124 and new Punto.

    The reliance of Fiat on the 500 in Europe will decrease significantly and sales will increase because they are expanding the line-up. now it remains to be seen if they will grab a significant share of the market.

    • Thanks for your views Pedro. I agree with you with the fact that FCA is now moving faster with new cars and this is for sure a positive thing. Italy is the market with the highest growth rate among the big 5, and Fiat is a big winner from this. However, as you can see a big part of the growth posted by FCA is coming from Italy as its sales performance do not show the same pattern outside Italy.

      • Even from your own picture the growth of Fiat sales in the big 5 is superior to the growth of the market in all of them except Germany.

        They are overly reliant on their domestic market for sales performance but that’s due to the minimal range they have on offer.

        The Punto, the 500 are OLD, the Bravo sales stopped a long while ago.
        Effectively they’ve been absent from the biggest segments in Europe for years now. So it’s normal that their share is more reliant on the italian market because of this. IMO, they have strong potential to grow in other markets with their new product.

        Glad that you’re back! 🙂

  3. They need a C-SUV, based on the new jeep…
    Everyone else is doing it… so… they can´t wait long…
    C-SUV is dominated by Nissan, so it`s not a “posh” segment” dominated by the germans…like others.

  4. Good analysis. One of the reasons FCA is losing market share outside of Italy is due to the botched-up rebranding and discontinuation of the Chrysler and Lancia brands, which still accounted for a significant percentage of sales especially during their peak years.

    Re-introducing both brands in a proper way may help, especially if Chrysler came back with it’s minivan and upcoming crossovers. Lancia unfortunately doesn’t have much to offer anymore, which is a very sad situation to say the least..

    • There’s no point in maintaining Lancia because it doesn’t sell outside of Italy and the dealer network for them is almost non-existent.
      Better to focus on the brands that have growth not only in Italy but also in other euro countries (Jeep, Alfa and Fiat obviously).

  5. What kind of article is this? The Italian market is at half of what it was before the 2008 crisis. As the Italian market grows, Fiat will grow with it. Not only that, but the Italian market is the most important- Italians understand cars better than “New” Europe- They buy quality, and won’t jump from unknown brand to unknown brand, just because. As they do here in Canada. You should see how many horrible korean cars are all of a sudden appearing on the streets.

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