The Italian Job
03-Feb-08
It’s all smiles at Fiat where the success of the Fiat 500 — recently launched in the UK at the London Eye — is helping to deliver substantial revenues for the previously beleaguered manufacturer.
The car of the year award is viewed by European manufacturers as one of the most important. A panel of 58 senior motoring journalists from 22 European countries are courted by manufacturers for months. The new Fiat 500 — the Cinquecento, the chubby little car that symbolised Italy’s postwar economic miracle — is said to have beaten more than 40 other cars the accolade – and by a considerable margin. Legend has it that Sergio Marchionne, who became chief executive of the Italian carmaker five years ago, was told by one of his relatives — he forgets whether it was his aunt or his mother — ‘You’ve got to bring back the 500.’
Not long ago, Fiat had been losing money and was seen as out of favour. The company has lately been in revived health due to a turnaround led by Marchionne.
Fiat cannot keep up with demand for the 500. It was expecting to sell 120,000 cars a year but has already recorded 130,000 orders since launch in July 07. Manufacturing capacity is being increased soon to 150,000 a year. All the 500s are being made at the same plant in Poland, which will from next year also start making the new version of Ford’s Ka. Deposits have already been taken for 8,000 cars in the UK. The 500’s success follows that of BMW’s revamped Mini, another reincarnation of a classic model. But the 500 is far cheaper; the top-of-therange model, with all extras included, will sell in the UK for £10,000.
The original tiny Cinquecento was a favourite of Hollywood films in the 1950s (it even appeared in ‘La Dolce Vita’). It went out of production in 1972 although a different version was made from 1991-96. Fiat’s recovery from near collapse continued in the second quarter of the year, with the Italian industrial group posting record sales and profits.
The car has single-handedly helped to achieve what Sergio Marchionne has called an ‘almost historic’ quarter for Fiat. Marchionne has, however, implied that Fiat would have difficulty meeting high demand in 08. With an initial run of 58,000 planned for 2007, the Italian automaker has already received orders for 51,000 units from its dealers in Italy alone just three weeks after the car’s Italian launch and one week after debuting in France. To meet the surging demand, production will increase from 58,000 to between an estimated 65 and 67,000 units.
Fiat is trying to position itself as a leader in low-emission cars as European lawmakers push manufacturers to cut their vehicles’ carbon dioxide emissions by a quarter by 2012. The company says the 500 is compliant with Euro 5 emissions limits from its launch, two years before the standards come into force.
The Cinquecento combines ‘emotional appeal with rational buying reasons’ such as lower fuel consumption and CO2 emissions, says Kevin Gaskell of EurotaxGlass, an automotive consultancy which has done some work for Fiat.
Analysts say Fiat should easily meet its initial target of 120,000 sales a year, which it says it can increase to 140,000 if demand is high enough.
More than a year before the car arrived, Fiat started marketing it as a return to everybody’s childhood. In Italy, advertisements appealed to patriotism, with slogans like, ‘The new Fiat belongs to all of us.’ Fiat offers extras on the car like a side stripe in the colors of the Italian flag — red, white and green — and little Italian flags stitched into the upholstery. Five hundred days before its introduction, Fiat asked potential buyers to enter a competition over the Web to design accessories for the car, and about 8,000 people did so. (The prize? Free accessories with the purchase of a 500.) Among the most popular of those customer-designed extras, at least in Italy, are a clear sunroof and the Italian colours as decoration. The car has about 100 options, including hand-stitched leather steering wheel covers from the furniture maker Poltrona Frau, 11 colours, and 7 interior trims. Fiat says the 500 is safe, too, despite its diminutive size. It comes with seven air bags, helping to earn it five stars, the highest rating possible, in the standardized European frontal collision test.
‘Like the Mini, you buy it because it’s interesting, beautiful things for the beautiful,’ said Martino Boff a, the managing director of the marketing consultants Icon Added Value in Milan. He added: ‘It’s not functional; it’s a luxury item; it’s a toy.’
