Fiat Pulls 500 Off U.S. Market as Americans Snub Italian Minicar

(Bloomberg) -- Fiat Chrysler Automobiles NV is halting production of its Fiat 500 and electric 500e hatchbacks in North America, the latest move by the automaker to curb exposure to a shrinking car market in the U.S.

As production of both models winds down at a plant in Toluca, Mexico, remaining inventory will be sold into next year, the company said in a statement. The Italian-American carmaker did not say what vehicles may replace them at its Toluca plant.

Fiat Chrysler will continue U.S. sales of the slightly larger 500X crossover, the 500L wagon and the 124 Spider roadster. But the decision to withdraw the brand’s mainstay 500 model from the U.S. ends an eight-year experiment and refocuses the company on its more profitable -- and larger-- vehicles such as Jeep SUVs and Ram trucks.

Fiat returned to the U.S. market in 2011, betting the stylish Italian micro-car could compete with the U.K’s Mini Cooper while satisfying a pledge to the Obama administration to help sell Americans on more fuel-efficient small cars. Despite a high-profile marketing campaign, the 500 model undershot an initial forecast for U.S. sales of 50,000 vehicles a year.

Former Chief Executive Officer Sergio Marchionne acknowledged marketing missteps a year into the initiative: “We thought we were going to show up and just because of the fact people like gelato and pasta, people will buy it,” he told reporters at the Detroit auto show in 2012. “This is nonsense.”

Plunging gas prices and American drivers’ love affair with big SUVs thwarted Fiat’s efforts to gain traction. Sales of all Fiat brand cars in the U.S. peaked at about 46,000 in 2014, and have been in free fall ever since -- dropping 41% last year to just 15,521 vehicles, the lowest level since the brand’s reintroduction to the U.S. market after a 30-year absence.

Fiat brand sales were down 38% in the first half of 2019, with deliveries of the 500 dropping 25% to 1,692. Sales of the 500 dwindled by more than half last year to just 5,370.

Fiat Chrysler plans to build a new all-electric 500 at its Mirafiori plant in Turin, but hasn’t said if that car will be sold in the U.S.

©2019 Bloomberg L.P.