Fiat Auto is relying on registrations of unsold cars by dealers to inflate its market share in Italy and across Europe, according to dealer officials and company sources.
They claim that cars registered by dealers in Italy are being exported to Germany and other countries, where they are sold as new cars and counted a second or even third time.
A company source said Fiat currently has 70,000 so-called 'zero-kilometer' cars in dealer stock in Italy - half of them at Fiat-owned dealers.
Friedrich Karl Bonten, chairman of Fiat's German dealer association in Frankfurt, said the carmaker has for several years sought to disguise a steady drop in its share in Italy by encouraging dealers to register new cars for a day. Some zero-kilometer cars are then de-registered.
'Fiat has done this for years in Italy, but the practice has intensified dramatically in the past months,' said Bonten, who owns a dealership in Kleve, Germany, near the Dutch border. 'Fiat always pushed numbers because with the Punto they wanted to play in the Champions' League of European top sellers. Now it's happening on a much bigger scale and they are also pushing the numbers of the Stilo and Alfa models.'
Fiat is not the only carmaker that encourages its dealers to self-register cars. UNRAE, Italy's importers' association, estimated that the total number of dealer-registered cars in April was 13,700, of which 5,200 were from Fiat Auto. But Fiat sources say that in the last few days in April alone, Fiat Auto dealers day-registered around 5,000 cars in Italy. That was despite the fact that Giancarlo Boschetti, Fiat Auto's new managing director, ordered an end to day registrations at a meeting in mid-April.
'Economically, we can't afford to continue with this strategy,' said Boschetti, according to a source who attended the meeting.
Boschetti's predecessor, Roberto Testore, also instructed that the practice be stopped.
For one thing, the strategy is expensive for Fiat. Dealers willing to cooperate receive incentives and subsidies on top of their normal profit margin, according to company sources. Taking into account all incentives and their normal margin, Italian dealers buy a new car from the factory at around 25 percent below list price, sometimes even cheaper, one senior Fiat executive said. He added that national importers in Europe buy cars from Fiat for around 20 percent below list price. Dealer margins are normally around 15 percent of the list price.
The result is that both new- and used-car prices are forced down, according to the Fiat executive.
Despite the day registrations, the company's market share in Italy is declining. The combined Fiat, Alfa Romeo and Lancia share hit a new low of 33.1 percent in the first four months of this year, down from 35.4 percent in the same period in 2001 and 34.3 percent in all of last year.
An internal company survey showed that at the end of last year Fiat dealers in Europe had a stock of 380,000 units, of which 100,000 units were zero-kilometer cars. Around 60 percent of them were in Italy. During 2001 Fiat registered about 180,000 zero-kilometer cars in Europe, of which 100,000 were in Italy, a company insider said.
But they add that the 180,000 registrations may represent far fewer actual cars. Many of the cars are double or multiple registered in various European countries.
'We know of groups of some thousand vagabond cars which are pushed around by Fiat to their national subsidiaries in Europe,' Bonten said. 'Cars registered once in Italy show up in another European country, where they are counted again as new cars when they are registered.'
Parallel import channel
Some cars are transferred after their second registration to another European country, or re-imported to Italy, where they are counted once again as a new sale.
Bonten would not speculate on how many of Fiat's European sales figures were multiple counted.
Fiat spokesmen in Turin declined requests to comment on this story. But a Fiat executive who asked not to be named said that a total of 180,000 new-car registrations in Europe was achieved last year with possibly as few as 60,000 cars.
According to ACEA, the European automakers' association, Fiat Auto's total sales in western Europe last year were 1,422,473, a decline of 3.6 percent from the previous year.
With Italy in decline (see story on Page 20), dealers use the 10 percent price gap compared with counterparts in other European markets to export the cars. They earn a profit on the cars and dealers in other countries still get them more cheaply than national importers can offer.
'This is, in fact, a parallel import channel, which is controlled by the company and sidesteps their own national importers,' said a Fiat executive.
Bonten estimates that about 30,000 Fiat Auto cars not ordered via the national importer found their way into Germany in 2001. A spokesman for Fiat's German importer said that figure was far too high, but declined further comment.
Fiat's total registrations in Germany last year were 123,674, down 1.2 percent from 2000 levels.
'We are aware of the problem of multiple registrations,' said Dieter Maag, responsible for the vehicle registration statistics and issuance of registration papers at Germany's Kraftfahrtbundesamt (KBA) in Flensburg. 'But we can't fight it, as long as not all authorities in Europe request the car identification number for registration and submit that to the European sales statistics.'
Maag said multiple registrations are possible because in addition to national registration documents, international documents called Certificates of Conformity (COC) are now available on request. COCs don't indicate whether a car has been registered before. With the same COC, a car could theoretically be registered in all European countries, Maag said.
'A few years ago this was a problem below statistical significance,' he added. 'But in the past one to two years it has intensified. We started addressing it in intensive discussions in the last six or nine months.'
Car manufacturers might engage in multiple registrations for two possible reasons, Maag said. One is to inflate market share; the other is the goal to reduce CO2 emissions to 140 grams per kilometer by 2008. With double or multiple registrations of low-emission vehicles, manufacturers could statistically reduce their average fleet emission level.
'I addressed this double-counting problem three years ago at the KBA,' Bonten said. 'I could prove the trick by identical chassis numbers, but I got very evasive answers.'
ACEA collects national statistics to formulate western European totals. But it does not crosscheck identification numbers.
Avoiding national subsidiaries pays off for dealers - but not for Fiat and its importers. All but one of its national subsidiaries in western Europe are unprofitable, said the Fiat source. The exception is in the UK, where grey market sales are prevented because continental dealers don't stock right-hand-drive cars. The strong pound versus the euro also provides a currency advantage.