Fiat enters the small SUV segment

An eye on the growing demand for small and economical utility vehicles, Fiat SpA is releasing a new version of its Fiat 500 today at the Paris Motor Show, in hopes of reviving sales in Europe and conquer markets in the United States and China.
With the release of 500 x, the Italian automaker joins a group of competitors such as General Motors co., Honda Motor Co., Nissan Motor Co. and Ford Motor Co., which offer compact SUVs. Although the competition is fierce, the new car comes amid an increase in demand for small utilities and more economical, especially in China and the USA-two markets that are growing and represent a great potential for profit.
The 500, or Cinquecento in Italian, was released for the first time in 50 years. The brand was resurrected by the Chief Executive Officer of Fiat, Sergio Marchionne, in 2007 and became relatively popular in Italy, Europe and in some emerging markets. Their overall sales, however, never reached expectations and come falling since 2009, when they reached a peak.
Although the current focus is on the 500, the 500 is entering its eighth year on the market without having gone through a full remodeling, which leads some in the industry wondering how far the Fiat can get without losing buyers fearful of investing in a car model prior to the financial crisis.
"Fiat is coming to a point where they have to update the 500, but this certainly isn't his main priority at the moment, since he is still selling well and there is still a certain enthusiasm around the car," says Ian Fletcher, an analyst at IHS Automotive in London.
The new model will try to leverage this remaining enthusiasm, at a time when Marchionne is giving more priority to North America, a market that has provided a solid performance at Chrysler Group LLC, the American unit of Fiat. In October, Fiat will be renamed Fiat Chrysler Automobiles and will have their shares traded on the New York Stock Exchange, two weeks after the launch of the new utility.
They were sold about 123 thousand units of Fiat 500 in North America since Fiat reentered pompously on that market in early 2011, after a hiatus of 30 years. Sales in the United States did not achieve the goals of Marchionne and Fiat overestimated the demand for what was billed as a luxury compact car.
The 500 is currently available in five different versions in the u.s., including an electric model and a convertible, with prices ranging between $ 16,500 and $ 32,000.
Fiat remains a niche brand in North America, responsible for less than 1% of sales of cars on the Mainland. The ambitions of the little 500 were dashed in part because gasoline prices have stopped rising and Americans have returned to buy bigger cars.
The 500 will be released in Europe early next year and will be available in about 100 countries by the end of 2015. In 2012, Fiat has launched the 500 l, a four-door version of the 500 who sold 74,000 units in Europe last year and roughly 69,000 this year until August.
Although it has retained the small and iconic silhouette that defines the 500, the new Fiat utility benefits from sharing many parts with the Jeep Renegade, Chrysler. Both cars are assembled in the same factory in southern Italy.
Sergio Marchionne argued that the two cars are different consumers, even though they are the same size. He said the Renegade is targeted to those interested in off road capabilities, while the normal 500 x attracts more urban drivers. Marchionne hopes to take advantage of the growing preference of buyers for vehicles more utilities.
"There's a lot of activity on the market of mixed utilities at the moment, but we expect this area to grow in Europe and in the rest of the world in the coming years, with people wanting to use that kind of model," says Fletcher, of IHS.
Nearly 2 million small or mixed utilities will be sold this year, a growth of 31% in 2013, according to estimation of the IHS. The number should grow to 2.6 million in 2015 and to 4 million in 2019, provides for the IHS.