Fiat Readies the Bambinos from Brazil
By Andy Bannister
Fiat is hoping to consolidate its grip on the substantial Brazilian market with two new small locally-engineered models to replace its current ageing budget line-up (like this Palio 1.8R) over the next two years.
The move signals the huge importance of Brazil – soon to become its biggest single market – to Fiat Auto, and tacitly admits that previous attempts by the company to produce a global world car were not a great success.
Given its plethora of existing and forthcoming small models in Europe, the last thing you would imagine Fiat would need is yet more economy models for its line-up. However, the requirement to produce cheap, sturdy designs tailored to what local consumers in one of the world’s largest countries want, means this is just what the company intends to do.
Fiat’s current entry-level car in Brazil is the Mille version of the evergreen Uno, born in 1983, which, incredibly, is still in production in South America in a rather clumsily-facelifted version and sold at a low price.
It is also exported to a number of other key developing markets globally to help keep Fiat’s flag flying in the smallest price bracket.
The Italians have certainly got their investment back from the Uno, which was one of the iconic small hatchbacks of its era in Europe and a best-seller there for a decade.
Above the Uno in the company’s current Brazilian line-up sits Fiat’s last serious attempt at a “world car”, the 1996 Palio. This was specifically designed to be around the size of the company’s European Punto but more rugged and cheaper to build in emerging markets.
This strategy worked well in Brazil, where the Palio three-door and five-door hatchbacks – and their Siena saloon and Strada Pick-up derivatives – all enjoy big sales thanks to regular updates keeping them looking fresh.
The Palio family has been much less successful in other markets where Fiat had big ambitions for it, including China, India and Eastern Europe. The company has, however, left no stone unturned in its search for new countries to sell the car, even gaining an unlikely and politically incorrect assembly foothold in the Stalinist dictatorship of North Korea.
The Palio hatchback’s replacement, known as Project 326, should debut in Brazil in 2010, with the Uno replaced by a smaller model, Project 327, the following year.
Brazil’s market offers tax breaks to companies selling cars with engines under 1000cc, so the two new models will need to still compete in this class. As well as keeping old designs going way past their normal shelf-life on other markets, another long-established Brazilian peculiarity is to sell cars with engines which run on ethanol, and today most manufacturers offer flexible-fuel vehicles which can run on both ethanol and gasoline.
Fiat has been a big player in Brazil since it arrived in the mid 1970s with the 147, a locally-adapted version of the Italian Fiat 127 hatchback. Today the company has a more diversified range and expects to sell over 600,000 models in 2008 including modern European designs alongside the locally engineered best-sellers.
Volkswagen and GM (which sells mainly Opel-derived designs under the Chevrolet banner) are Fiat’s key competitors, but Ford is also strong and Renault, Peugeot and some Japanese makers are also present.
Brazilian cars are widely exported, particularly to other countries in South America, and a few come to Europe. It is not, however, expected the new models will be aimed at European consumers, with Fiat developing Zastava in Serbia as its low-cost production base on the continent, augmenting its long-established plants in Poland and Turkey.
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