Fiat’s U.S. Dealerships Could Reach Profitability within 12 Months

Head of Fiat Brand, North America at Chrysler Group LLC Laura Soave predicts new Fiat dealerships in the U.S. will be operating in the black within six months to one year of opening.

Speaking with Automotive News last week, Soave said the time it takes for a new Fiat dealership to turn a profit depends heavily on the type of dealership in question.  According to her, new Fiat dealerships located in temporary facilities can expect to become profitable “a little bit quicker.”

It gets back to the type of facility it is,” Soave said. “The dealers in these temporary facilities are going to get there a little bit quicker.”

If Soave’s prediction is correct, it means the dealerships will be able to reach profitability selling only the Fiat 500 minicar. So far, she said U.S. Fiat dealerships have been reaching the vehicle margin targets projected by the Italian automaker.

Although Soave declined to talk specifics, Chrysler executives told potential dealers that the 500 would generate a per-vehicle gross profit of up to $1,500 when it was reviewing candidates last summer. Soave said sales of the 500 Sport version, which sells for about $2,000 more than the base model, accounted for about half of all U.S. sales during the first five months of the year.

“A lot of what we’re seeing is customers really want to build their car,” said Soave. “Customers are willing to wait the six to eight weeks to get the one they want.”

In addition to the type of dealership, Soave said the markets in which dealerships are located will also determine the length of time needed to reach profitability. She said the average domestic Fiat dealership should be selling approximately 50 units per month.

To increase awareness and bolster sales, a nationwide ad campaign was launched on August 1.

Soave also admitted that U.S. dealership openings have fallen short of Fiat’s initial projections. She said a total of 97 domestic dealerships had opened as of last week. By year’s end, she expects that number to climb to approximately 130.

Total U.S. sales have also come up short of the Italian automaker’s 2011 target of 50,000 units. Soave said she expects to hit that target next year.

The launch of the 500 subcompact last fall marked an end to Fiat’s 28-year absence from the U.S. market.

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