Fiat Chrysler Offers $1,700 Cash to Lure Volkswagen Drivers

Is the VW Crisis a Risk to Germany’s Economy?
  • Fiat gives trade-in incentive as Volkswagen reels from scandal
  • European auto stocks are reviving while Volkswagen's decline

Fiat Chrysler Automobiles NV is seeking to lure customers away from Volkswagen AG with rebates of as much as 1,500 euros ($1,700) in Italy amid the German competitor’s woes over cheating on emissions tests.

Fiat Chrysler is offering the discounts on top of other incentives on the trade-in of a car from any of Volkswagen’s brands, according to an internal memo published in Il Giornale daily that was confirmed by dealers. A spokesman for the Italian-U.S. manufacturer in Turin declined to comment.

While brand-swap discounts aren’t unusual, offers that specifically target one company are rare. Fiat’s pitch comes as Volkswagen reels from the biggest crisis in its history, and continues an antagonistic relationship between the two carmakers. Fiat Chrysler Chief Executive Officer Sergio Marchionne accused VW in 2012 of creating a “bloodbath” in Europe with its pricing strategy as manufacturers struggled with a market slump. VW responded by threatening to leave the ACEA, the industry’s main lobby in the region, which was headed by Marchionne at the time.

The ACEA, of which VW is still a member, is now part of the growing isolation of Europe’s biggest carmaker, which admitted Sept. 18 to installing a “defeat device” in diesel-powered cars designed to fool emissions testers about performance. The association said Sept. 23 that there was “no evidence” other manufacturers are deliberately duping regulators. Volkswagen’s stock has continued to decline since the revelation, while European competitors’ shares have started to recover.

Comparison of Volkswagen shares with European competitors
Comparison of Volkswagen shares with European competitors

Incentives that Fiat Chrysler is offering during October to Italian VW customers range from 500 euros for a Fiat Panda subcompact to 1,500 euros for a Jeep Grand Cherokee.

Fiat sent another memo to distributors last week to reassure customers that it “fully complies” with all testing rules and its vehicles are “not equipped with defeat devices,” according to a copy obtained by Bloomberg.

Automotive News Europe reported Monday that U.S. manufacturer Ford Motor Co. is providing a 750-euro trade-in bonus across its model range that’s also targeted at Italian drivers of Volkswagen cars. Calls and e-mails to Ford’s spokespeople in Europe weren’t immediately answered after the close of business hours.

Volkswagen’s stock has plunged 42 percent since Sept. 18. The shares are down 13 percent in the past week, in contrast to gains of 8 percent for Fiat Chrysler in Milan, 3 percent for Paris-based PSA Peugeot Citroen and 2.9 percent for German luxury-car producer BMW AG.

The VW brand ranks second in Italy to the Fiat nameplate. The German marque’s Italian deliveries fell 1.4 percent in September, while Fiat’s jumped 24 percent.

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