While escalating fuel prices helped new compact car sales outperform the market as a whole last month (31% v. 16% respectively), sales really took off for Fiat’s subcompact 500 model.

As we mentioned in this month’s edition of Guidelines, February marked Fiat’s best sales month since the brand’s U.S. launch in March of last year.  The Italian marque sold 3,227 500s which equated to a 69% boost over the prior month and exceeded the brand’s previous high recorded in August ’11 (although the margin was a narrow 100 units). 

The drivers behind the recent ignition in Fiat sales aren’t difficult to pinpoint — rising fuel prices and considerable increases in incentive spending.

Per Autodata, 500 total incentive spending has averaged $1,510 per unit over the past two months, which is 209% greater than the average for the prior five months.  Helping matters, the substantial surge in incentive spending coincides with yet another spike in fuel prices.
According to the U.S. Energy Information Administration (EIA), the national average price for regular grade gasoline has jumped by $0.57 since the end of last year.  The current average price of regular grade gas now stands at $3.83 per gallon, up 26 cents from one year ago. 

Last month’s sales explosion resulted in a dramatic reduction in days’ supply for the 500.  New inventory levels for the model decreased by a massive 50 days in February to reach 82, which is the lowest level of inventory recorded for the brand to-date.
Like we’ve seen in the past, spiking fuel prices go a long way towards jumpstarting subcompact car sales, but we’ve also seen demand wane for ‘micro’ cars as gasoline prices have relaxed (e.g. Smart).  Something tells me that Fiat can’t get the sportier – and more visceral – 500 Abarth model to market soon enough so that the brief run of success translates into more of lasting trend rather than just a passing delight.