The Fiat 500 marks more than just the return of a classic model

Fiat%20500%2C%20london%20eyeThe launch party for the updated Fiat 500 last week was about a lot more than just the launch of a new car. The glitzy event on London’s Southbank showed the world that, after its much-publicised troubles of recent years, Fiat is back.

Three years ago, having just reported an operating loss of €800m (£550m) and suffering from a chronic lack of investment, the famous Italian marque’s future was in doubt. But its problems had all been forgotten as assorted dignitaries and celebrities gathered last Monday to see the 500 begin a two-week ride on the London Eye to mark its launch.

The original classic 500 sold more than 3.8 million cars from 1957 to 1975 and cemented Fiat’s reputation as a producer of small, affordable vehicles. The company still has a long way to go to re-establish itself as one of Europe’s leading carmakers but early signs are good. The new 500’s reviews have been almost universally positive and it was presented with the coveted 2008 Car of the Year award in Berlin last Monday.

Managing director of The Automotive Partnership Mike Moran says: “It’s a gorgeous looking car and is probably the coolest new small car since the Mini. But Fiat has this habit of coming out with something great and then coming out with a turkey so it has to keep it going.”

Moran says that one of Fiat’s problems has been that it does not have the “co-ordinated design look” of rivals such as Ford, making consistency difficult when it comes to positioning and communicating its products. But he adds that the current range is the “best line-up Fiat has had for quite a long time”.

The turning point

Many experts attribute the start of Fiat’s turnaround to the launch of the Grande Punto at the end of 2005. With models such as the Punto and the Bravo, Fiat has extended its range and begun to improve the quality of its cars. But director of the Institute of Automotive Research Professor Garel Rhys warns: “There have been so many false dawns. The quality hasn’t been up to the competition from Germany but it has gone a long way to eradicating the problem of quality. The thing it really needs is for one of the other big players in Europe to make a mistake but, unfortunately for Fiat, nobody has done that.”

However, Fiat certainly seems to be getting its own house in order. It has just recorded its largest ever trading profit of €3.2bn (£2.4bn) for last year – up 12.9% on 2006 – and its UK sales figures rocketed more than 64% in 2006 after a disastrous 2005. The company sold 59,409 cars in the UK last year – up 1% on 2007.

Fiat is aiming to sell 18,000 500s by the end of the year in the UK and marketing director Elena Bernardelli says the car brings the “cool factor” to the Fiat brand. “What we still need to do, maybe not so much in Italy but certainly in this country, is to increase the desirability of the brand,” she adds. “That’s the role of the 500.”

Marchionne as ‘catalyst’

Founding partner of Fiat’s UK advertising agency Krow Barry Cook believes the arrival of Sergio Marchionne as chief executive in 2004 was the “real catalyst” and calls the 500 the “icing on the cake”. Cook adds: “It has genuinely reached a high point and a great springboard for the future.”

Fiat introduced a new logo at the end of 2006 (MW November 2, 2006) in an attempt to make a break from the past. Andrew Edwards, chief executive of Leo Burnett and Arc, which was the lead agency on the 500 launch event, says: “The 500 is a fantastic brand in its own right. Fiat has become cool – the interesting thing is how they leverage that and what they do next.”

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