The other side of Fiat brand: a low-cost range?

Fiat low costDue 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?

During the first 9 months of this year, Dacia was able to increase its sales registrations by 30% outperforming overall market by far. Fiat had mixed results because the bad results of its mainstream range were some how offset by the 500 family. Source: JATO Dynamics.

During the first 9 months of this year, Dacia was able to increase its sales registrations by 30% outperforming overall market by far. Fiat had mixed results because the bad results of its mainstream range were some how offset by the 500 family. Source: JATO Dynamics.

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.

A possible Fiat low-cost range would include current nameplates and new ones. The Panda should be repositioned with lower prices, the Uno could be revived. The 500L Living would die giving life to a new Pandone. And the Ottimo could be built in Turkey and become the very first low-cost offer in C-Segment.

A possible Fiat low-cost range would include current nameplates and new ones. The Panda should be repositioned with lower prices, the Uno could be revived. The 500L Living would die giving life to a new Pandone. And the Ottimo could be built in Turkey and become the very first low-cost offer in C-Segment.

The range

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.

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9 responses to “The other side of Fiat brand: a low-cost range?

  1. They already have a B-segment low cost car: Palio/Grand Siena, it’s perfect to battle the Dacia Sandero/Logan and it even has SW (very popular in Italy and North Europe) and Pick-up versions. I don’t understand why Fiat isn’t already producing it in Turkey and Serbia (now that Serbia has a free trade agreement with Russia), Mexico and India or China, it should be the global face of the low-cost Fiat, just as the 500 is the face of the aspirational Fiat.

    • Right. But remember that they sold already the Palio and Palio Weekend in Europe more than 10 years ago. They didn’t succeed because of their poor quality.

    • @ Mauricio..when did they make a free trade agreement with Russia?Is it new?

  2. Dear Ruan,
    Great insights. I’ve already given an answer to one of your comments at ANE about Fiat’s future models. I mentioned that Fiat should focus now on the B segment with a new Uno and like its predecessor should be a rational car with a revolutionary design, something that Citroen is doing now with C4 Cactus, which besides been a C segment car is based on a B-segment platform, just the way Fiat should do with the B-wide platform, a B model but also be considered an option for C segment buyers. B segment is crucial for Fiat, its natural place, new models for C and D segments should not be launched considering the tough competition in the C segment and the dropping sales in the current D segment in Europe, Ottimo and Viaggio would be just failures. Linea’s replacement and its hatchback and SW variants would be suitable for Turkey and other developing markets but not for Europe, besides Uno Fiat should launch a new Freemont, maybe named Panda XL and XXL, based on the CUSW platform with 5 and 7 seats configurations. A 500 Plus with 5 doors to replace Lancia Y would be the last model in the aspirational side in my opinion, as a 500 spider or a 500Z (Zagato’s version of 500) once hypothesized by Marchionne seem to be out of question considering the low sales of Mini roadster and coupe, which will be by the way discontinued. The rebadged of Dodge Journey, Freemont, was a successful operation at least here in Brazil, so it could be also worthwhile to do the same with Chrysler 200 which could be exported from US worldwide as Fiat Croma, just as a way to have another aspirational model aside from 500’s range, because in my opinion the future Fiat spider based on Miata’s platform would be probably a failure also as few customers will buy it for the same price of a Miata. A more expensive Alfa version (Duetto) would be successful at least in US, unfortunately as phased out as even an Abarth sibling of such iconic model as Miata will fail, so better leave also coupe and cabrio segments too.
    Cheers.

    • Hey Claudio. Thanks a lot for your feedback. It is absolutely right that Fiat as brand doesn’t come back to the D segment. The Uno and possible C-Segment family should work only if they are well positioned as rational/low-cost cars. I disagree when you say that the Chrysler 200 could work as a Fiat. Fiat is known for making small and efficient cars and the Freemont may had worked in Italy and Brazil but it’s not a volume maker. Instead, I believe the new Fiat 124 Spider/Abarth version are great cars for improving Fiat’s image. They will sell quite well in the US. Keep reading.

  3. Dear Juan,
    Great insights. I’ve already given an answer to one of your comments at ANE about Fiat’s future models. I mentioned that Fiat should focus now on the B segment with a new Uno and like its predecessor should be a rational car with a revolutionary design, something that Citroen is doing now with C4 Cactus, which besides been a C segment car is based on a B-segment platform, just the way Fiat should do with the B-wide platform, a B model but also be considered an option for C segment buyers. B segment is crucial for Fiat, its natural place, new models for C and D segments should not be launched considering the tough competition in the C segment and the dropping sales in the current D segment in Europe, Ottimo and Viaggio would be just failures. Linea’s replacement and its hatchback and SW variants would be suitable for Turkey and other developing markets but not for Europe, besides Uno Fiat should launch a new Freemont, maybe named Panda XL and XXL, based on the CUSW platform with 5 and 7 seats configurations. A 500 Plus with 5 doors to replace Lancia Y would be the last model in the aspirational side in my opinion, as a 500 spider or a 500Z (Zagato’s version of 500) once hypothesized by Marchionne seem to be out of question considering the low sales of Mini roadster and coupe, which will be by the way discontinued. The rebadged of Dodge Journey, Freemont, was a successful operation at least here in Brazil, so it could be also worthwhile to do the same with Chrysler 200 which could be exported from US worldwide as Fiat Croma, just as a way to have another aspirational model aside from 500’s range, because in my opinion the future Fiat spider based on Miata’s platform would be probably a failure also as few customers will buy it for the same price of a Miata. A more expensive Alfa version (Duetto) would be successful at least in US, unfortunately as phased out as even an Abarth sibling of such iconic model as Miata will fail, so better leave also coupe and cabrio segments too.
    Cheers.

    • Thanks a lot for your feedback Claudio. The strategy is pretty much like that: two families within the same brand. The next product to arrive will be the new Fiat 124 Spider or Barchetta, to be presented in Geneva this year. Where are you from?

  4. Great article, and agree that a split in the ranges into two, but the name ‘low cost’ is misleading.
    Better names would be family and chic, bit like how Range Rover and Discovery have been split.

    In the Chic range would be the 500, although renaming the larger cars 600 would have been better.
    My range would be:- 500, 500C, 500 Abarth range, 600 (current 500L), 600L (500XL) and 600X.

    Meanwhile in the family range wold be the Panda family.
    Range:- Panda Uno (3 Dr based on 500), Panda (as current), Panda L (based on Jeep Renegade/500X), Panda XL (7 seat version of Panda L).

    Fiat does not need to have cars any bigger than these.

    Leave the larger cars to the other FCA brands.

    • Right, the Panda family is already called the functional one, but the thing is that it should be priced at low-cost alternatives such as dacia.

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