Fiat back in US to rev up small-car sales
Left in ’83 over quality issues
AUBURN HILLS, Mich. — Almost three decades after it slunk out of the US market, Italian automaker Fiat is back, hoping it can erase lingering memories of poor-quality vehicles and make Americans fall in love with small cars.
It is a tall order, but Fiat is not one to shrink from a challenge.
The company took over management of a failing Chrysler Group last year and is close to making a profit there as it revamps Chrysler’s cars and trucks. Now, Fiat sees an opportunity to reintroduce its brand and get ahead in the fledgling US small-car market.
Fiat is unveiling two Fiat 500s at the Los Angeles Auto Show today, a three-door hatchback and a convertible version. The hatchback is set to go on sale in the United States next month, with the convertible to follow in 2011.
Electric and high-performance versions are planned in 2012, and a four-door version after that.
Pricing will not be announced until today, but Fiat said the 500 will be significantly less than BMW’s Mini Cooper, a similar car, which starts at $20,000.
This is the first time Fiat has shown a car bound for North America since it pulled out of the market in 1983. Back then, cars like the Fiat Strada were widely derided as rust-prone and unreliable.
But that is ancient history to US car buyers. Laura Soave, who was appointed head of the Fiat brand in North America earlier this year, said there is very little knowledge of Fiat’s earlier poor quality among current buyers, who are drawn to the 500’s huggable look. The car has a rounded shape, high roof, and circular headlights. The design evokes the original Fiat 500, which sold from 1957 to 1975 worldwide.
The design alone will draw buyers, Soave said. “Then you tell them it’s Italian, and they think it’s cool, sexy, stylish. That elevates it.’’
Fiat has not totally erased its quality problems. The brand ranked last or near last this year in customer satisfaction surveys in the United Kingdom, France, and Germany, according to J.D. Power and Associates. But the 500 was tops in the mini-car category in the French survey, and it has been popular with Europeans. More than 500,000 have sold since the car’s introduction in 2007. In US terms, that is equivalent to the annual sales of the Chevrolet Malibu or Ford Focus.
Demand for small cars is higher in Europe, where gas is two to three times more expensive than in the United States. Small cars have accounted for 44 percent of sales in Western Europe this year, but just 10 percent of US sales.
That does not bode well for the 500, which is 7 inches shorter than the Mini Cooper. But Soave said she is not worried and that Fiat’s sales goals are realistic. The company plans to sell 50,000 cars in North America in the first year, about the same number as Mini. It hopes to double that by 2014.
Soave said one reason sales of small cars have been weak in the United States is a lack of choices. Until now, buyers who wanted a sporty Italian car had to pay $100,000 or more for a Ferrari or Maserati.
She said Americans are migrating to smaller things in other areas of their lives, like housing, and will gradually adopt smaller cars. Downsizing may even be essential as stricter fuel economy rules take effect in 2016. Fuel economy numbers have not been released for the North American 500, but the European one gets more than 40 miles per gallon.