Italy: 500L helps Fiat to keep its share in Nov/12

Photo by: Ansa.it

Photo by: Ansa.it


One more terrible month for Italian car market. In November 2012 the market fell 20.1%, which is as bad as the months before October, when the fall slowed down (-12.4%). One year ago the market fell 9.3% compared to November 2010, but two years ago, in November 2010, the market had a deeper fall (-21.1%). All those numbers explain the hard moment of Italian auto industry and the difficult coming months. However analysts have said that the fall should stop in 2013, and the recovery should come in 2014. Now Italy is Europe’s fourth largest market far behind its eternal rival, France. In that scenario Fiat Group maintained its market share thanks to some specific models. The whole group plus Jeep managed to rise its market share from 28.49% on Nov/11 up to 29.74% last month. This is particularly good news in current situation. Fiat Group sells fewer cars now but is catching share from other auto makers, which are doing worse than the Italians. Nevertheless the ‘good’ fact is explained by only one brand of the group, Fiat, which is down ‘only’ 14%, far from total market’s fall, farther than the other brands of the group, and even much farther than competitors from Germany and France. That is why Fiat brand occupies a bigger place in the group: last year its sales counted for 71% of the group’s total. This year its share in the group is up to 73.5%, which is too much, but is explained by the fact that Lancia and Alfa Romeo (the other 2 ‘big’ brands) don’t have a big range of products. This time Alfa Romeo had a big fall and its Giulietta model did not maintain its sales figures as it happened in previous months. Lancia, down 23.4%, is in complicated situation as it is really dependent on Italian market and the new Ypsilon keeps falling more than total market.

Among mainstream brands Fiat did quite well. Alfa and Lancia continue to fall. Too bad for VW, Renault and Opel. Source: UNRAE, bestsellingcarsblog.net

Among mainstream brands Fiat did quite well. Alfa and Lancia continue to fall. Too bad for VW, Renault and Opel. Source: UNRAE, bestsellingcarsblog.net

After Fiat, then comes Ford as the best-selling brand in Italy. It was down a massive 21%. Then comes VW, which for the first time falls more than total market, down a shocking 27% (it is perhaps its worst result in Europe). A worse situation for Opel, Citroen and Renault. The only big brand to have positive results is Peugeot (now ahead of Lancia). Toyota fell 9%, while Kia is up an incredible 10%. So compared to its main rivals Fiat did very well, but Lancia is in a difficult situation, while Alfa Romeo does not that bad considered the fact that it only offers 2 models. There is concern about Lancia, as it can’t reach not even 5% of the market and Italy represents more than 85% of its sales. So, Lancia faces two difficulties: it does not sell as before in a market that continues to fall. Alfa Romeo is somehow in a better situation, as it is not that dependent on Italy. This year will be by far the worst for both brands in the last 2 decades. Going further, Fiat Group’s share increases due to specific models. Fiat models to have positive result were the new Panda (a tiny growth) and the new 500L which could be the protagonist of the month. The new small MPV was Italy’s 10th best-selling car and could be Fiat’s new star in coming months according to what happened in November. More than 2.000 units were sold that month. That’s a result that can be analyzed from two points of view. 2 thousand units for an all-new model in its third month of life is nothing. But if current situation is taken into account, then the 500L is a complete success. It can be also a kind of savior of Fiat Punto as its gets old while the 500L is a B-MPV that can perfectly fit the needs of those looking for a subcompact. In the opposite side the 500 had a big fall, even worse than Punto. Lancia sold almost 3.100 Ypsilon, down a massive 37%, which is a lot. The Musa, which should be out of production soon, increased its registrations 54%. Finally the Giulietta, which used to be in top 10, now occupies place 14th with almost 1.800 units, down 26%. It was the deepest fall among Alfa Romeo models.

The Panda is the only important model to grow in November. The 500 had a terrible month. The Punto continues to fall and is extremely close to Ford Fiesta's registrations. Too bad for the Ypsilon. The Giulietta falls but not as much as all of its competitors. Source: UNRAE, bestsellingcarsblog.net

The Panda is the only important model to grow in November. The 500 had a terrible month. The Punto continues to fall and is extremely close to Ford Fiesta’s registrations. Too bad for the Ypsilon. The Giulietta falls but not as much as all of its competitors. Source: UNRAE, bestsellingcarsblog.net

The 500L was Fiat Group's 5th best-selling car in Italy. It is the leader of the segment. Good month for the Musa and B-Max. Source: UNRAE

The 500L was Fiat Group’s 5th best-selling car in Italy. It is the leader of the segment. Good month for the Musa and B-Max. Source: UNRAE

Panda stable. Punto declines. 500L grows. The right equation for the crisis. Source: UNRAE

Panda stable. Punto declines. 500L grows. The right equation for the crisis. Source: UNRAE

Click here to see Italy December 2012 results

Click here to see Italy October 2012 results

A possible solution to troubled Italian sales

Photo by: ilgiornale.it

It is my belief that during difficult times such as current European car industry crisis, any idea looking for solving it is welcome, no matter the impact it may have. The situation is that bad that European authorities are finally considering Sergio Marchionne’s idea of assisting the industry and control over capacity problem. But even the most optimistic previsions indicate that next year will be at least as bad as current one. The reasons for this scenario are well-known by everybody but not the possible solutions. Not all car makers are struggling to sell their products. In one side there are French, Italian and American brands trying to resist. In the other side there are VW, BMW and Mercedes, relatively comfortable as they keep earning money in China. That’s why getting to a common solution is difficult, well interests are different and VW, the European leader, is some how benefiting from the mess in which Fiat, PSA, Renault, Ford and Opel are nowadays. In the case of Fiat, the Italian car maker has two big problems: its Italian factories working at 50% of capacity (and therefore the problems with union labors) and the sharp drop of Italian car registrations (along with Spain, Italian fall is the worst of big European markets). Italy represents 54% of Fiat’s sales in Europe. YTD figures show that Italian market has dropped 20% and of course Fiat, as the leader of that market, experiences a big fall too.

Looking for solutions implies understanding the problem. Italians stop buying cars because of economic situation and the bad perspective for coming years. The country is part of a deep recession in most of Europe which is the result of high public expenditure, low revenue and high government inefficiencies. After years of this terrible combination, European governments finally decided to execute a severe austerity plan, firing public employes, and increasing taxes. Italy is part of that austerity plan and Italians are suffering the consequences: less money to save as they have to pay more taxes, and the worst, less job offer. Those looking for a job are coming thru a difficult time, while those having one struggle to keep it in an economy that will shrink 2.4% this year, with unemployment rate around 11%, according to predictions of Confindustria, Italy’s employers’ lobby group. The uncertainty that reigns among Italians is big enough to diminish their spending of everything that is not strictly necessary. Cars is part of that decision and Fiat knows that. If people are not sure of their economic future they cut expenses and they begin with the things that are not vital. Cars are not a basic need so when someone is not sure of keeping his job in coming months, one of the last things this person will think about is buying a car. It explains why Italian market sinks and will continue to do it as far as the economic situation and job offer don’t get better.

The problem is that Fiat can’t wait till things get better. They need to sell cars and increase production levels of its Italian factories and must do it as soon as possible. Understanding the client’s needs and behavior is always a good way to have the appropriate approach in order to sell. And that’s exactly what Fiat should do at least in Italy, its homeland. If the problem for a big part of the population is keeping its job in coming months, then Fiat could use its strategic position as the major private company in Italy to offer some buyers the possibility of buying their new cars with a sort of unemployment insurance. I mean, Fiat as a big player of Italian economy, is able to neutralize the risk of possible future unemployment of potential buyers. They can offer clients to buy their cars (through a credit) and give them the possibility of suspending monthly payments if they ever become unemployed. Of course, it would not apply to everybody, and only in those cases in which Fiat, using its strategic position, makes a close analysis of several companies that could be considered candidates as they might not have problems in the future. That is, Fiat would assume part of the risk the client has of becoming unemployed and so in case that happens (Fiat should only work with those companies with less than 10% of probability of collapse), that client could suspend payments for the time he does not get a new job. The client that could be benefited from this should pay certain quantity of money down and of course a higher interest rate for the credit. For this, Fiat should make a deep analysis of all industries and companies and then make a classification according to their economic situation and future perspectives. Only those buyers working on those companies with low risk exposure could applied for this particular purchase. And in case they become unemployed, they would keep their debt and will be able to use the car. In other words, Fiat would be offering the opposite of normal credits without any money down: instead of not receving the money now, Fiat would get it now but might not receive it in the future, if things get bad for the client. Anyone could say that this could be a good idea of buying a car and then stop paying for it. But when anyone becomes unemployed the very first thing this person looks for is to find a job immediately.

This approach could be a good way of telling clients that Fiat understands their situation and it can support them in case they need help. Fiat would not be risking too much as they would only give this possibility to ‘safe’ companies’ employees and might increase its car registrations, currently affected by this uncertainty about job among potential buyers. The bad side of the equation is that it would not be a good message for the employed people who can’t apply for the credit. Fiat would be telling them their job is not secure and making business with them would not be a good deal. One last thing: this credit should only apply for Fiat Punto, Lancia Ypsilon or Alfa Romeo MiTo. ‘B-Segment’ is Fiat’s major problem nowadays, with the Punto that shrinks 34% so far this year, and the Ypsilon that, no matter its youth, fell 32% in October and 40% in September. And there is the MiTo, which never took off in terms of sales. Most of Fiat’s fall in sales is due to Punto’s drop as the Panda is stable, up 3% YTD. Those thinking more of their job whose income really depend of it, are considered middle-class Italians who normally buy ‘B-Segment’ cars. One person in this situation would not buy a 500, the chic and expensive citycar. They would not buy either the Bravo/Giulietta/Delta models, which are more expensive. If they wanted to change their car they would choose a Punto or Ypsilon, which are affordable and some how comfortable. So the target fits perfectly the products, and in the case of the MiTo, it needs more promotion to get a proper level of sales figures, and this could be a good idea to do it. Or what do you think of this idea?

Last year the Punto counted for one third of Fiat brand sales in Italy while the Ypsilon is almost doubles that number. YTD change for the period January-October 2012 vs. January-October 2011. Source: carsitaly.net and FGW Data basis

Italian car market sinks. Fiat Group down 24%

Photo by 500blog

September 2012 was again a terrible month for Italian car market, down a massive 25,7%, the biggest fall since March 2012. Italians bought 37.000 cars less than one year ago, 44.000 less than two years ago, and 80.000 units less than in September 2009. That’s why specialized press has constantly said that there is a demotorizzazione of the market, which means that Italians are not buying cars as they used to since late 60’s till 5 years ago. Partly because of current European economic situation and partly because those years in which Italian government helped people to buy cars are gone. Fiat is part of the problem and the solution, but this time it seems it will have to do more by itself than with Italian support. In September the whole group sold 24,2% less than one year ago, again a bit better than total market. Fiat gained more market share while some of its main competitors contributed to a deepest fall of the market: Ford (-38%), Opel (-34%), Citroen (-32%) and Renault (-38%). In the other hand, VW was down only 13%, and Peugeot -5%. But the fact that there are other losing more market than Fiat does not mean that the situation of the Italian group is not bad. Certainly a double-digit fall is a worrying issue because it means that there is no such big market they had in mind when they built the factories all over Italy. Of course first victims of this disaster are new models that required a big investment for its development and now they don’t find the clients. Old models can do it better from the point of view of profits as their development costs are already amortized. Obviously less innovation means less sales, so the key is to find the right scenario for investment, innovation and sales.

Sales figures and variation for September 2012/2011. Source: http://www.bestsellingcarsblog.net and UNRAE

Fiat brand was down 23% due to the Punto and surprisingly the Freemont, which was down a massive 53%. It is the first time it happens with this Crossover, as it was having very good results since its launch last year. There are two possible reasons: the first one could be the beginning of decline period of the Freemont as it was not an all-new model when it was introduced. And the second one, more feasible, is the emerge of new Fiat 500L, which had its first complete month in the dealerships. Last month 938 Fiat 500L were sold in Italy, 29 more units than Fiat Freemont. The Freemont sells around 1.500 units per month. Though they are not direct rivals, as the 500L belongs to ‘B-MPV’ segment while the Freemont is a ”D-MPV’ and their prices are quite far away from each others, it all seems that the new 500 MPV got some sales figures of its bigger brother. At the end most of Freemont’s offer is composed by 5 seats with diesel engines, which is pretty much what the 500L offers: 5 seats with lots of efficient diesel engines, and during this difficult times, some families would choose the cheapest option, no matter the big difference there is between them. Lancia’s sales figures dropped 26% because of the big fall of the Ypsilon, down 40%! Why a new car as the Ypsilon is having such bad results? car sales per segment indicate that ‘B-Segment’ is the most affected one with current crisis as the few people who buys a car are not looking for the traditional 5 door compact hatchback but for cheaper ones no matter the car is smaller. The Ypsilon is part of that change. Alfa Romeo sold 24% less, which is not bad at all as it depends on only 2 models, one of them extremely competitive but the other one far away from that denomination. The Giulietta continues to impress no matter the great power the VW Golf has in Italy and the new competitors coming from Germany. There is no doubt that Alfa Romeo guys must be really worried about coming months when the new generation of VW Golf will arrive. Jeep has the worst result, down an impressive 59%. It seems the new Grand Cherokee can not do it by itself and the lack of modern ‘C-SUV’ offer affects considerably Jeep’s total registrations. Ferrari was down 52% and Maserati -55%.

Italy car sales by segment A, B and C. (e) for estimated. Source: http://www.bestsellingcarsblog.net, UNRAE

938 Fiat 500L were sold in September. It allowed it to be the second best-selling small MPV in Italy. Source: http://www.bestsellingcarsblog.net

 

 

Click here to see Italy October 2012 results

Click here to see Italy August 2012 results

Fiat-Chrysler to exploit the small platform

Photo by 500blog.blogspot.com

The platform Fiat uses for its Punto and MiTo will soon be available in much more models. The idea is to build future larger cars such as minivans and SUV, for many brands of the group. The first model to use it is the ‘B-MPV’ Fiat 500L which goes on sale in Europe this month and in the US market next year, all of them built in Serbia. But Fiat wants more and is expected that a small SUV under Fiat and Jeep brands will use it too. It is unclear if next generation Jeep Compass/Patriot, which belong to ‘C-SUV’ segment, will use this platform as it can be enlarged up to 4.4 meters in length and can be equipped with petrol engines up to 2.4 liters. Fiat calls this platform the ‘Small’ one, while the CUSW platform is the one for larger models such as the Alfa Romeo Giulietta that is the base for Dodge Dart/Fiat Viaggio, and may be the same base for future Chrysler 200 to be presented in Detroit 2013.

The idea with the use of the ‘Small’ platform is to offer several models from a unique base so Fiat can save money building the cars wherever they need to. It is also part of Fiat plans in Italy after the meeting Sergio Marchionne and John Elkann had with Italian government. The main conclusion after the meeting is that Fiat and the government will look for solutions to enhance local production more focused on exports to American market. Obviously it means that they will have to work hard on more competitive models so they can some success in that difficult market. Marchionne asked for government financial help as it happens in Brazil with their new factory in Pernambuco. The hard thing is whether Italian government can do it when it is facing so many problems with the debt. If it is just a matter of getting lower interest rates for loans it is certainly a good move, but if Fiat wants the government to be an active part of the solution, personally I think it will not solve anything at the end. If there is any company that always depends on public help when things don’t work, it means that something does not work, and public intervention means less independence and more problems with unions.

Source: Automotive News Europe

August/12, Fiat suffers in a terrible Italian market

One more terrible month for Italian car market. Again the fall was above 20% and things don’t seem to get better. During August 2012 Italian market fell 20.23% compared to August/11, which means it is the third month in a row with a drop above 20% after June (-24.4%) and July (-21.4%)*. It was by far the worst result among big markets in Europe (Germany, France, UK, Spain, Benelux) and means a big threat for the future of Fiat Group in Europe, which considers Italy as its ‘fortress’ such as France is for Renault or PSA. It is why some important car industry analyst continue to look for solutions to stop the crisis that could result in another factory closure in the next months. The Automobile Club d’Italia, ACI, said this week that what the government is doing has not helped at all to solve the problem. “Government’s policies have focused only in the rise of taxes to car buyers, who are now decreasing the use of their cars looking to reduce their expenses… more than going forward, car industry is using the reverse, at least in our country: like this there is no future. We ask the government to establish a work group to create a strategy to give some oxygen to car buyers and companies, so more than 10.000 jobs can be saved. The first and immediate policy could be the reduction of taxes on gasoline“. In fact what makes Italian market to have the worst fall among European car markets is that gas prices and new taxes are the rising a lot. Italians buy fewer cars as having one means more expenses than before and economic situation in Europe does not seem to get better in the short or mid-term.

Europe’s sales registrations during August 2012

In this terrible context Fiat-Chrysler sold 16.699 cars in August 2012, or 29.58%** of total market. It means the whole group’s sales figures fell 20.59%, a bit more than total markets’. The reason for this fall on its market share (one year ago it was 29.72%) is explained by the big fall of Lancia, down 32%, strongly dependant on Ypsilon model which had a strong fall. Something that did not happen to Fiat and Alfa Romeo. Fiat registrations fell ‘only’ 17.54% allowing it to gain more market share, while Alfa Romeo was down 20.49%. The other 3 brands, Jeep, Ferrari and Maserati, the small ones in terms of units sold, had very bad results. Ferrari sold only 6 units, down a massive 63%, while Maserati sold 4 units, down 72%. The reason for the super cars fall is the new policy against the owners of this kind of cars. Anyway less units sold of these two brands has a bigger impact on profits. Comparing to other car makers, Fiat brand sold 2.4 more cars than its immediate competitor, VW, while one year ago it sold 2.31 more cars than Ford, the second one by that time. Fiat’s fall was lower than Ford, Opel, Citroen and Renault’s, while VW, Peugeot, Toyota, Nissan, Hyundai and Kia (+78%) did better. Alfa Romeo did better than BMW but Mercedes and Audi had lower falls. It sold more cars than Mercedes.

Italy’s car sales figures by brand during August 2012. Fiat brand did better than total market while Lancia did bad because of the fall of the Ypsilon. Source: UNRAE

In terms of models the situation is pretty much the same. The Panda was again the best-selling car and was up 10%, while the Punto was in second place, down 50% and only 680 units above the Ford Fiesta, the second place of B-Segment. But what really impresses is the massive fall of Lancia Ypsilon, down 49%. It is the first time this new generation has bad results and Lancia must be thinking of what went wrong and what to do for the coming months for a model that is still considered a new product. The small 500 fell 4% thanks to new versions and colours, but also because VW has not been able to gain a good place among A-Segment cars with its Up!. The Giulietta did well with more than 1.000 units sold, allowing to be Italy’s 10th best-selling car and this time 670 units behind the leader, the old VW Golf (the Alfa was down 9.7% while the Golf was down 16.5%). Other good results come from the Lancia Musa, up 125%, and the Thema with 48 units delivered, up 300%. The Bravo sold only 489 units, down 45% while the Freemont begins its slowdown as it sold 13% less than one year ago.

Top 5 per segment in Italy in August 2012. Certainly B-Segment is the one with worst results and the Peugeot 208 is catching some part of that segment. The same happens with the Panda which is killing its rivals from France. Source: UNRAE

Year-to-date numbers show that 290.840 Fiat, Lancia, Alfa, Jeep, Ferrari and Maseratis were sold until August. It means   73.604 cars less than one year ago, or -20.19%. Compared to total market’s performance (-19.86%), Fiat-Chrysler’s share is now 29.64% while one year ago was a bit better, 29.77%. Only Ford, Toyota and Renault did worse than that, while Germans fell but not that bad, and Koreans gained a big share of the market, as it is happening in Europe. At the end Fiat-Chrysler is suffering the consequences of a market that was tainted by government helps for several years, and now is doing the opposite. What Fiat must do is to depend less not only on Italian market but on government aid, no matter if it means less units sold, because at the end those units will be safe and real sales.

 

Click here to see Italy September 2012 results

 

*www.carsitaly.net

** UNRAE

The Italian crisis and the extinction of Ferraris

The tittle may be shocking, but it explains what is going on in the troubled Italy with expensive cars. According to Bloomberg news the situation with luxury cars is becoming dramatic in Italy because of the financial crisis and governments measures. It is not only a matter of new car sales figures, which are down an incredible 20%, but is also about the impossibility of having the Ferraris, Maserati, Porsche or Lambos in a country where new taxes appear every day and the fight against tax evaders has become an official duty. That’s why many Italians are exporting their super cars in order to avoid tax payments or the persecution of police. According to the article, the number of secondhand high performance cars exported from Italy was up 177% in the first 5 months of 2012, when 13.633 cars were taken out of the country. Italian authorities began a raid against all tax evaders going to exclusive places where all the millionaires go with their supercars. By doing it they could know who was really declaring the right income and therefore paying enough taxes. And as expected, Italian police has found several people enjoying their ‘toys’ and having the ‘dolce vita’ without paying the right amount of taxes. It is certainly a pity in a country known by its supercars in its wonderful roads.

Ferrari and Maserati sales figures in their main markets during 2011. They are Fiat’s most profitable brands. Source: Ferrari Annual Report via Torque News.

The rise on taxes to luxury cars has affected for the first time high performance luxury brands. Most of the times, this kind of cars is more resilient to economic crisis as millionaires are the last ones to suffer the consequences of a recession.  But in Italy things are different and Ferrari for example forecasts a fall on its new car sales of 47%, while they keep increasing their exports to China, the Middle East and the US. Eventhough local market is decreasing for Ferrari and Maserati, they keep being Fiat Group’s most profitable brands. Just in the first half of the year both brands had a combined operational profit of 175 million euros, with an awesome margin of 12.2%, beating BMW’s 11.6%, and helping Fiat Group to decrease its losses. It seems Italian economic crisis is not only affecting the small Panda and 500 but also the gorgeous Ferrari 458 and Maserati Gran Turismo.