Fiat wants a low-cost sub-brand to compete with Dacia

Article by Christian Andrei, on February 7, 2013

Fiat is thinking about coming out with a low-cost sub-brand that will compete with the Dacia brand of Renault, according to CEO Sergio Marchionne. If this plan pushes through, this brand’s cars will be produced outside of Europe in order to lessen the manufacturing costs. When interviewed in Turin at the Carignano theatre, Marchionne said that he is “wondering” if there’s room in Fiat for a low-cost brand similar to Dacia.

Fiat’s plants in Italy have a lot of spare capacity but Marchionne thinks that Fiat can’t make a profit when rolling out a car in its domestic market that will be offered in Europe for 7,450 euros. He added that Fiat is presently studying its manufacturing capacity outside of Europe to determine the viability of a low-cost brand.

In the last handful of years, Fiat has been considering a low-cost brand but it has not proceeded with this project since officials were concerned that they didn’t have a profitable business plan. One of the names that Fiat thought for the brand is Innocenti, an Italian brand that Fiat purchased in 1990. It launched the Innocenti Mini in 1974. Bertone had styled it and it was built on the underpinnings of the original Morris Mini.

Fiat also thought about using names where a blend of letters or numbers was related to the concept of a back-to-basics product, like ABC or 123. Apparently, this low-cost brand project has come back to the table as Marchionne seeks to bring the brand further upscale, focusing on two lineups of almost premium models based on the 500 and Panda minicars.

Marchionne said that the company has to determine if there’s space left under after the Fiat brand shifts upward. Several other car companies will be launching or are studying plans to put up budget brands to cope with growth in this segment in growing markets like China and India as well as the rising demand for "crisis cars" in crisis-hit Europe.

Topics: fiat, dacia

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