Due to several reasons, Fiat brand faces a new direction in terms of its positioning. The Fiat 500 success explains one direction, in which the brand wants to become aspirational in lower segments, such as the city-car, B-MPV and B-SUV. The good positioning of the iconic 500 and the 500L (not the Living version) allowed Fiat to be an option in the top-level of their segments. This means that even if it has some image problems, Fiat as a brand succeed by asking more money for their aspirational products in a tough European market. The result is that the brand depends a lot on the 500 family, which counted for more than 50% of European sales in 2013 (excluding Italy). In some markets the brand is only known for the small 500. That’s good and bad because from one side the brand gains more money (the 500 is more profitable than any other product of the brand) and more visibility; but it is a negative thing as the brand can’t depend only in one product-range. Fiat is a big-volume car maker and needs more presence in other important European car segments. After many failures in C-segment and the bad end of the Punto (which lead European car sales in 1997), Fiat counts on the Panda (specially in Italy), 500 and 500L as the top sellers of its reduced range. But as mentioned before, in the past Fiat succeed with the Punto, second generation Panda and somehow with the Bravo/Brava in the early beginning. How can the brand get back with the rational products as well?
Fiat must be present at the bottom level of segments. In a context in which budget (low-cost) and premium brands continue to gain share against the mainstream ones, Fiat as a brand can’t be out of the trend and must make use of its historical background and expertise as a low-cost/efficient cars manufacturer. Besides the 500, the brand is mostly known for building cheap and efficient cars that are no longer available in its current range. The new Panda is a great car but isn’t cheap anymore. The Punto is quite cheap but not competitive anymore. The Bravo is about to die, and in the case of the Freemont, even if it’s competitive and cheap, it isn’t a real Fiat. Therefore the second direction the brand should take is to consider the next generations of the ‘rational’ family as the low-cost range of the family. By doing so, Fiat would be the only European brand to offer two completely different ranges within each segment attacking from two sides: the low and high levels. Therefore Fiat would be able to cover the two increasing sub-segments: the low-cost and the premium/high-ended ones with the rational family (Panda, Panda XL, Punto) and the aspirational one (500, 500L, 500X, 500 5-doors). In my opinion, there is no reason to keep fighting in the mainstream segment when consumers keep moving into low-cost/premium and Fiat isn’t even in the top 5 consideration ranking (at least in the C-Segment). A cheap but well-built Fiat could have more possibilities to succeed and become a real competitor to the successful Dacia range, for example.
Another Brand? no please
To do so, Fiat doesn’t need to enlarge its already big list of brands. Some analysts have talked about reviving Innocenti as the possible real low-cost brand of the group leaving Fiat at the mainstream level. But the last thing FCA needs is more brands when it can barely manage Alfa Romeo and Lancia. The two-sides brand is possible with Fiat range thanks to the role that the 500 and the Panda have played in the recent years. Therefore there can be 2 families inside the same brand, just as Citroën did with the DS range, or Land Rover is doing with the Range Rover and Discovery families. A cheap and efficient Panda can coexist with a stylish and expensive 500 in the same dealer. Actually in May’s industrial plan, Olivier François, Fiat brand chief, focused his presentation on the 2 sides Fiat will have including the way the dealers will look like. Is a right thing to position its models in an aspirational and rational worlds because not all consumers conceive the car in the same way. The point is that the rational family should be also a low-cost alternative to those looking for real cheap cars.
The popular Panda is of course the starting point for the low-cost family. It’s already known for being an efficient city-car, but it must be priced at more ‘rational’ levels. The B-Segment should be covered with a new Punto or, why not, the new Uno, following their basic values: comfort, efficiency and easy-to-maintain. The brand could also offer a B-Sedan based on the next Linea. The C-Segment could be a cheap version of the Fiat Ottimo, but at this segment the low-cost issue should be carefully analyzed as the consumers needs and budget may change. Certainly there’s room for cheap MPVs and SUVs. By the time the current 500L Living gets to the decline period of its commercial life, Fiat should reposition it as the new “Pandone” and leave the stylish work to the regular 500L. In my opinion, the Living shouldn’t be part of the 500 family. The Panda 4×4 should be repositioned with lower prices in order to become more popular, and there should be room for a larger version in order to compete with the Duster. Where to build them? certainly not in Italy. Turkey and Serbia are the ideal places to produce the new low-cost range.