Fiat needs more than the 500 to turn core brand around

Thu Oct 2, 2014 11:48am EDT
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By Agnieszka Flak

PARIS (Reuters) - While rivals roll out new models and concept cars, Fiat FIA.MI has little to show at the Paris auto show besides another variant of its retro-styled 500 compact car, in what is starting to look like a worrying trend for the carmaker's namesake brand.

Following the full takeover of U.S. unit Chrysler, the newly-named Fiat Chrysler Automobiles (FCA) has set out an ambitious growth plan focused on its upmarket Alfa Romeo, Maserati and Jeep brands.

Analysts say it makes sense to concentrate on higher-margin premium vehicles that are selling strongly in the United States and emerging markets, but are concerned the group is neglecting a Fiat brand which still accounts for a large chunk of sales.

FCA sold 1.5 million Fiats last year, with deliveries of the mass-market brand accounting for 34 percent of the group total.

The 500X debuting in Paris should help lift sales by adding to the popular mini-SUV category. But the crossover car is unlikely to significantly change the face of Fiat's core brand, starved of models and stuck with an aging line-up.

"The 500 is getting older and older, the success of its variants has been limited and they lack a competitive offering at a time when Volkswagen (VOWG_p.DE: Quote), Peugeot (PEUP.PA: Quote) and Renault (RENA.PA: Quote) continue to launch new cars," said Sascha Gommel, an analyst at Commerzbank. "Even if the European recovery was gaining momentum, Fiat would definitely lose out."

BUMPS IN THE ROAD   Continued...

A new Fiat Chrysler Automobiles sign is pictured after being unveiled at Chrysler Group World Headquarters in Auburn Hills, Michigan May 6, 2014. REUTERS/Rebecca Cook