Chrysler Furloughing 1,300 at Factory Near Detroit as Sales Fall
Dropping sales of the main midsize vehicle of Fiat Chrysler have pushed to the automaker into indefinite layoffs of 1,300 employees at a factory near Detroit.
Workers at the second shift at the assembly plant of Fiat Chrysler located in Sterling Heights, Michigan, starting on July 5 will be furloughed as the Chrysler 200 is starting to stack up in dealer lots due to slow sales.
Sales of the vehicles were down over 61% through the end of March and inventory increased to a supply of 150 days, according to an automotive industry tracker.
Automakers consider the optimal time to give dealers sufficient selection for customers is 60 days.
Fiat Chrysler sold just 7,500 of the vehicles in March, which was less than half as many as were sold during the same month one year ago.
It is the first time since 2009, the company has had an indefinite layoff, when demand for both cars and trucks fell coming out of the big recession, and it is caused in some part by buyers in the U.S. shifting to SUVs from cars.
Midsize cars have been hard hit in particular by this shift and saw sales drop by 3.5% for the first quarter of 2016.
However, the 200 has had other types of problems, including negative reviews because of unresponsive handling, a four-cylinder engine and a transmission that shifts roughly.
Consumer Reports magazine two years ago said that every other sedan in the same category was better.
Even Sergio Marchionne the CEO at Fiat Chrysler criticized the 200 at this year’s auto show in Detroit, saying its rear door design was bad.
Marchionne in late January also said that FCA is looking for a partner to build smaller vehicles such as Chrysler 200 and Dodge Dart so it could make more of its hugely popular Jeeps at plants in the U.S.
He would not name the factories that would be getting more Jeeps, but the contract with UAW last year promised new vehicles for the factory in Sterling Heights as well as Belvidere, Illinois.
This week the union said that the upcoming layoffs were not surprising and that FCA was not the only company that has had trouble selling vehicles.