Image: Sergio Marchionne
Fiat’s CEO Sergio Marchionne poses next to the new Fiat 500. In the weeks ahead the tiny car will roll into the carmaker’s new U.S. showrooms, marking the Italian automaker’s first return to selling cars in the U.S. for 27 years.
Image: Paul A. Eisenstein, contributor
By contributor
updated 2/3/2011 9:37:54 AM ET 2011-02-03T14:37:54

It’s sometimes said that Americans have short memories. Fiat is betting on it.

It’s been 27 years since the Italian automaker last sold cars in the United States under the Fiat brand name. By the time the automaker withdrew from these shores it had acquired a reputation for turning out unreliable, rust-prone cars. Now it’s getting ready to stage a comeback as part of its new alliance with the struggling American automaker Chrysler.

In the weeks ahead the first Fiat 500s will roll into the carmaker’s new U.S. showrooms and, if all goes according to plan, Fiat hopes to sell as many as 50,000 of them before the end of the year.

The tiny 500 coupe is one of the smallest cars on the road, but it will have a lot riding on it. Known as the Cinquecento back in Italy, the Fiat 500 will not only lay the groundwork for Fiat’s comeback, but also for the return of the carmaker’s Alfa-Romeo brand to the U.S. And it will mark the beginning of a much broader partnership between Fiat and Chrysler.

“Americans have short memories and are likely to forget what it was like the last time Fiat was here,” noted George Peterson, chief analyst with the consulting firm AutoPacific. Back in the early 1980s, the Italian automaker saw its sales collapse under the weight of endemic quality problems, ultimately forcing it to abandon the U.S. market.

“But the new 500 promises to be a lot better car,” Peterson added, basing his expectation on the strong response Fiat’s microcar has received in other markets. The vehicle has won a flood of kudos. It was, for one thing, proclaimed World Car of the Year by a panel of international journalists, in 2010. The tiny car also grabbed the 2009 World Car Design of the Year accolade at the New York auto show.

Still, wining over Americans won’t be easy, Peterson notes, and Fiat officials agree. Even if Fiat isn’t saddled with past memories (or its old nickname, a play on the letters of its name: “Fix-it-Again-Tony”), Fiat will have to prove the new car is reliable and fun-to-drive, and it will have to overcome American resistance to small cars.

Trends appear to be moving in the right direction, insists Laura Soave, the new U.S. brand manager for Fiat. She notes that small car sales in the U.S., overall, have surged from 198,000 units per year in 2004 to 442,000 last year, despite the sharp downturn in the overall automotive market in 2010. Fiat is forecasting that the segment will hit 896,000 units per year by 2014.

New models on the market will certainly help, as will higher fuel prices. Demand for small cars such as the Mini and the Smart fortwo surged in 2008 when gas prices hit $4 at the pump — though sales volumes tumbled when the petro-crisis collapsed. The price of gas has again passed $3, although analyst Peterson cautions that with prices increasing much more slowly, this time, “there’s less of a sense of panic.” That’s likely to mean motorists will be in less of a hurry to downsize.

So, acknowledges Soave, the challenge will be to sell small cars like the Fiat 500 on their merit. And a key message for Fiat’s new offering is “you won’t have to give anything up,” she added.

Safety concerns are a traditional challenge for small cars, but the 500 has been engineered to survive an American-style collision, with seven airbags, the extensive use of high-strength steel and a triple load path designed to channel crash forces away from the passenger compartment. The vehicle took the top ranking in Europe’s NCAP crash test, and Fiat is betting the 4-seater will score similarly well when it’s tested here in the U.S.

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Unlike classic small cars, which were primarily sold on price and fuel-economy, the Fiat 500 is no “econobox.” It offers a surprising number of features for a base price of $15,500, and it can be purchased all-but-fully-loaded for $19,500.

The $17,500 Fiat 500 Sport model includes bigger 16-inch wheels and tires, a spoiler, a quick-shifting manual gearbox and a premium Bose audio system. And initial reviews have generally deemed it fun to drive.

While the Italian carmaker will no doubt make some use of traditional marketing channels to spread its new tagline “Life is Best When Driven,” Fiat will also likely focus on alternative methods to get the word out, including so-called “graffiti walls” that it’s setting up in key markets around the country. Social media will be a critical part of the marketing process too.

Where some small car brands have tried to target specific niches — Toyota’s Scion brand notably focusing on hip, young urbanites — Fiat is betting it will have an unusually broad appeal that defies narrow demographics, according to Soave.

There’s little doubt the new 500 has head-turning power, as was continually demonstrated when I took the vehicle on a day’s test drive in and around San Diego recently. But Fiat managers are well aware that sporty coupes, large or small, tend to have a relatively short shelf life, typically reaching their peak in about 18 months before sales start to tumble.

To overcome that problem Fiat has planned out a series of model updates, with a convertible version of the 500 on tap, as well as the Abarth high-performance model, and even a battery-electric edition.

“We don’t build a brand with one model,” Soaves said, somewhat cryptically, hinting that still other variants — and entirely different products — will flesh out U.S. Fiat showrooms in the coming years.

If she’s right, and the Fiat 500 hits its target, it should make it easier to re-launch the once-popular Alfa-Romeo brand in the U.S. It could also validate the carmaker’s plan to use various Fiat platforms as the foundation for future Chrysler models, including a replacement for the compact 200 sedan and convertible.

That’s a lot to be riding on such a small car.

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Explainer: 2011: The year of the reborn minivan

  • Image: Dodge Caravan

    The minivan has been alternately pronounced dead and revived repeatedly as various alternatives have debuted and departed. But the van chugs onward, unassailable in its position as the best vehicle for transporting the maximum number of people in the least amount of space and with the least amount of fuel.

    Minivans are easier to park than long-snouted crossover SUVs, they have more fight-reducing elbow room inside and their sliding doors mean that the young’uns don’t inflict insurance claims on adjacent cars every time they climb in or out of the van.

    Are minivans cool? TODAY Moms weigh in

    Whether 2011 marks a renaissance for minivans or just the recognition that this is a critical segment that isn’t going to be displaced, carmakers clearly agree on one thing: They need fresh products because every minivan currently on the market will be replaced during the 2011 model year, or in calendar year 2011.

    Indeed, Americans bought more than 460,000 minivans last year, and with appealing all-new choices, 2011 should attract even more minivan adherents.

    Here’s a list of new minivans for 2011.

  • Chrysler Town & Country

    Image: Town and Country

    When Chrysler Chairman and CEO Lee Iacocca conceived of a “leather minivan” for the 1989 model year, the Town & Country was his notion that just because a box on wheels is practical doesn’t mean it can’t also be comfortable and luxurious. Now that model is more feature-packed than ever. Leather doesn’t set a van apart from the rest anymore, so the 2011 Town & Country has standard rear back-up camera, blind spot monitoring and rear cross-traffic alert to minimize the chance for “I didn’t see it” accidents. The 2011 Town & Country should be well-received, as the 2010 model was already America’s top-selling minivan, accounting for a quarter of all minivan sales.

  • Dodge Grand Caravan

    Image: Dodge Caravan

    The Dodge Caravan was the minivan that launched the minivan segment (along with the Plymouth Voyager) in 1984. As vans in the class grew not-so-mini, so did the Caravan’s name as it became the Grand Caravan. The Grand Caravan is Dodge’s version of the same vehicle as the Town & Country, and it aims to be less expensive, with less standard equipment, while offering a hint of sportiness (presumably just in case you need to race to the local Target for another box of Pampers). Key is the new 283-hp Pentastar engine, giving Dodge (and Chrysler) van drivers Hemi-style bragging rights for the most power. Cue Tim Allen.

  • Ford C-Max

    Image: Ford C-Max

    Minivans have become maxi-vans, leaving a potential opportunity for smaller vans. Mazda has been in this space with its Mazda5 for several years, but a large brand like Ford could legitimize this so-far marginal van sub-segment. Ford terms the C-Max a 5+2 seater, recognizing that the third row is suitable for car-pooling teammates on their way to soccer practice, but is also probably not ideal for adults on long drives. Segment exclusive gadget: a sensor that lets a person carrying the van’s key to wave a leg under the back bumper to open the hatch, saving them from fumbling for keys while carrying groceries. Ford has announced plans for hybrid and plug-in hybrid versions of the C-Max for 2012, making it potentially the most fuel-thrifty family hauler.

  • Honda Odyssey

    Image: Honda Odyssey

    Honda destroyed the myth that “minivan” equals “Chrysler” when its innovative Odyssey van set new standards for convenience features and garnered large sales. Until the Odyssey, competitors blamed the weak sales of their poor products on customers’ reflexive purchases of Chrysler vans, but Honda proved that consumers just want practical features. The new-for-2011 Odyssey proposes that consumers want a sleek, stylish minivan. It remains to be seen whether shoppers will be attracted by the styling, or whether they will continue to look past exterior appearances and concentrate on interior features. The rear seat video screen is so wide that its can show two different episodes of Dora the Explorer (or any other video content) simultaneously, side-by-side on the screen.

  • Kia KV7 concept

    Image: Kia KV7
    AFP - Getty Images

    Kia is the only minivan maker that doesn’t have a fresh family hauler headed to showrooms in coming months, if not there already. But lest anyone think that the aggressive Korean upstart is satisfied with being left behind in the face of new competition, Kia unveiled the KV7 concept at the Detroit auto show, previewing the styling for its next generation Sedona. Of course, the Sedona won’t actually have the KV7 concept’s outlandish gull wing doors, but auto show concepts are supposed to be outrageous. Just don’t expect your kids to be able to disembark from the van’s back seat like Marty McFly climbing from his time-traveling DeLorean.

  • Mazda5

    Image: Mazda5
    Mazda Motor Corportaion

    People movers are smaller in Japan, but Mazda thought its best solution to replacing its old MPV minivan was to “hit ‘em where they ain’t” by importing a smaller Japanese-market model with no direct competitor in the U.S. market. The six-seat Mazda5 retains the light weight and simplicity of manual sliding side doors that are so carefully designed that they close with the push of one finger. The 2012 iteration carries expressive new styling too. And this van’s claim to fame? Enthusiast drivers can buy one with a manual transmission if they want. Zoom zoom.

  • Nissan Quest

    Image: Nissan Quest

    Nissan has followed its own path in the minivan segment, admirably and unsuccessfully, as family van buyers didn’t buy into the Quest’s quirks. For 2011, Nissan has punted that strategy, introducing a thoroughly conventional and completely equipped contender that should easily gain the attention of Odyssey and Sienna intenders rather than scaring them off. Available dual sliding glass moonroofs allow more light and air into the van’s interior depths than is normally the case, while still permitting space for the overhead video screen.

  • Toyota Sienna

    Image: Toyota Sienna

    Toyota saw Honda’s success in challenging Chrysler directly with a full-sized contender and followed up with a bigger Sienna that was an instant hit. The 2011 Sienna continues that path with available eight-passenger seating and the only available four-cylinder engine among full-size minivans. Unfortunately, there is only a slight fuel economy benefit from the smaller engine, but it could be a step in the right direction. And the Sienna is the sole all-wheel-drive minivan on the market, making it a viable alternative to a crossover SUV for customers concerned about all-weather security.

  • Volkswagen Routan

    Image: Volkswagen Routan

    The truth is that Chrysler did not invent the minivan; Volkswagen did, way back in the 1950s. The old Beetle-based microbus was the first minivan, but the company let that legacy wither away over the decades. VW still makes vans in Germany, but they are too expensive to be competitive in the price-sensitive U.S. market. So instead the automaker sells its own version of Chrysler’s minivan, branding it the Routan. So far sales have been tepid, but a refreshed version of the van (not yet revealed) featuring the improvements seen in the new Chrysler vans should make the Routan more appealing to U.S. car buyers.

  • Ford Flex

    Image: Ford Flex

    Ford’s Flex gets an honorary mention here. It’s almost a van, and derived from the Fairlane concept, which like the Kia KV7 debuted wearing impractically designed rear doors. In the Fairlane’s case, they were rear-hinged “suicide” doors rather than Kia’s top-hinged gullwings. Regardless, they didn’t make it to production on the Flex. Ford considered proper sliding doors to make the Flex a minivan, but consumer clinics revealed such a strong customer aversion to minivans that Ford estimated it could sell triple the number of Flexes if the vehicle were equipped with SUV-style hinged rear doors, according to Ford styling chief J Mays. But in 2010 Chrysler sold three times as many Town & Country minivans and three times as many Grand Caravan minivans as Ford sold Flexes. Maybe if it had suburban-chic sliding doors Ford would sell more of them.


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