It’s sometimes said that Americans have short memories. Fiat is betting on it.
It’s been 27 years since the Italian automaker last sold cars in the United States under the Fiat brand name. By the time the automaker withdrew from these shores it had acquired a reputation for turning out unreliable, rust-prone cars. Now it’s getting ready to stage a comeback as part of its new alliance with the struggling American automaker Chrysler.
In the weeks ahead the first Fiat 500s will roll into the carmaker’s new U.S. showrooms and, if all goes according to plan, Fiat hopes to sell as many as 50,000 of them before the end of the year.
The tiny 500 coupe is one of the smallest cars on the road, but it will have a lot riding on it. Known as the Cinquecento back in Italy, the Fiat 500 will not only lay the groundwork for Fiat’s comeback, but also for the return of the carmaker’s Alfa-Romeo brand to the U.S. And it will mark the beginning of a much broader partnership between Fiat and Chrysler.
“Americans have short memories and are likely to forget what it was like the last time Fiat was here,” noted George Peterson, chief analyst with the consulting firm AutoPacific. Back in the early 1980s, the Italian automaker saw its sales collapse under the weight of endemic quality problems, ultimately forcing it to abandon the U.S. market.
“But the new 500 promises to be a lot better car,” Peterson added, basing his expectation on the strong response Fiat’s microcar has received in other markets. The vehicle has won a flood of kudos. It was, for one thing, proclaimed World Car of the Year by a panel of international journalists, in 2010. The tiny car also grabbed the 2009 World Car Design of the Year accolade at the New York auto show.
Still, wining over Americans won’t be easy, Peterson notes, and Fiat officials agree. Even if Fiat isn’t saddled with past memories (or its old nickname, a play on the letters of its name: “Fix-it-Again-Tony”), Fiat will have to prove the new car is reliable and fun-to-drive, and it will have to overcome American resistance to small cars.
Trends appear to be moving in the right direction, insists Laura Soave, the new U.S. brand manager for Fiat. She notes that small car sales in the U.S., overall, have surged from 198,000 units per year in 2004 to 442,000 last year, despite the sharp downturn in the overall automotive market in 2010. Fiat is forecasting that the segment will hit 896,000 units per year by 2014.
New models on the market will certainly help, as will higher fuel prices. Demand for small cars such as the Mini and the Smart fortwo surged in 2008 when gas prices hit $4 at the pump — though sales volumes tumbled when the petro-crisis collapsed. The price of gas has again passed $3, although analyst Peterson cautions that with prices increasing much more slowly, this time, “there’s less of a sense of panic.” That’s likely to mean motorists will be in less of a hurry to downsize.
So, acknowledges Soave, the challenge will be to sell small cars like the Fiat 500 on their merit. And a key message for Fiat’s new offering is “you won’t have to give anything up,” she added.
Safety concerns are a traditional challenge for small cars, but the 500 has been engineered to survive an American-style collision, with seven airbags, the extensive use of high-strength steel and a triple load path designed to channel crash forces away from the passenger compartment. The vehicle took the top ranking in Europe’s NCAP crash test, and Fiat is betting the 4-seater will score similarly well when it’s tested here in the U.S.
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Unlike classic small cars, which were primarily sold on price and fuel-economy, the Fiat 500 is no “econobox.” It offers a surprising number of features for a base price of $15,500, and it can be purchased all-but-fully-loaded for $19,500.
The $17,500 Fiat 500 Sport model includes bigger 16-inch wheels and tires, a spoiler, a quick-shifting manual gearbox and a premium Bose audio system. And initial reviews have generally deemed it fun to drive.
While the Italian carmaker will no doubt make some use of traditional marketing channels to spread its new tagline “Life is Best When Driven,” Fiat will also likely focus on alternative methods to get the word out, including so-called “graffiti walls” that it’s setting up in key markets around the country. Social media will be a critical part of the marketing process too.
Where some small car brands have tried to target specific niches — Toyota’s Scion brand notably focusing on hip, young urbanites — Fiat is betting it will have an unusually broad appeal that defies narrow demographics, according to Soave.
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There’s little doubt the new 500 has head-turning power, as was continually demonstrated when I took the vehicle on a day’s test drive in and around San Diego recently. But Fiat managers are well aware that sporty coupes, large or small, tend to have a relatively short shelf life, typically reaching their peak in about 18 months before sales start to tumble.
To overcome that problem Fiat has planned out a series of model updates, with a convertible version of the 500 on tap, as well as the Abarth high-performance model, and even a battery-electric edition.
“We don’t build a brand with one model,” Soaves said, somewhat cryptically, hinting that still other variants — and entirely different products — will flesh out U.S. Fiat showrooms in the coming years.
If she’s right, and the Fiat 500 hits its target, it should make it easier to re-launch the once-popular Alfa-Romeo brand in the U.S. It could also validate the carmaker’s plan to use various Fiat platforms as the foundation for future Chrysler models, including a replacement for the compact 200 sedan and convertible.
That’s a lot to be riding on such a small car.
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