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Fiat pins hopes on new Polo rival

2005-09-07 09:36

Striking new Grande Punto will arrive in SA early in 2006

Baptized the "Grande Punto" or "Big Punto" because of its larger size, the car is the latest in a raft of new models proposed by the Turin-based giant.

But the company has made it clear that as it seeks to reverse the long decline of its once-great car business, it is pinning its hopes on the Punto ahead of the rest.

"Among these new models the most important is the new Fiat Punto," said Matteo Cariglia, an analyst at Actinvest. "The management has stressed a lot the innovativeness of this new car."

Fiat is investing around $22.2bn in 20 new models between 2005 and 2008: the Punto, which represents around a quarter of the company's car sales, is expected to be the most popular.

Fiat has sold 6 million Puntos since it first launched the car in 1993. Four years later, it became the best-selling car in Europe.

Italian government

The government was closely watching Fiat, one of Italy's top private industries.

"I want to give my best wishes to Fiat for the new Punto," Premier Silvio Berlusconi said in a statement.

"It is a beautiful Italian vehicle, innovative and high-tech. I think it is the right choice to market it not only in all of Europe but also in more than 40 markets outside of Europe."

The new model comes at a critical time for Fiat, which asserted its independence in February after an alliance with Detroit-based General Motors broke off.

Under the 2000 alliance, Fiat had the option to force GM to take over its auto unit, but the American company ended up paying $2bn to get out of the deal.

Patrick Juchemich, a senior auto analyst for the Sal. Oppenheim bank, said the Punto had benefited from technical input from GM and that the car had a good chance of doing well.

Nonetheless, the Punto is a "critical car for the survival of the auto sector" at Fiat, Juchemich said.

"If we look at where we were a year ago and where we are today, we have to be satisfied," said Fiat Chairman Luca Cordero di Montezemolo. But, he added, "God only knows how much work there is still to do."

Fiat's market share in Italy has more than halved from about 60% in the late 1980s, while its share in Western Europe has dropped from 14% to 7% in the same period.

Fiat Auto SpA, which has been losing money since 2000, is aiming to be in the black starting in 2007, while the Fiat group is hoping to post a net profit this year. Fiat Auto SpA accounts for around 40 percent of Fiat group's revenues.

Last week Fiat CEO Sergio Marchionne upped the stakes, saying that following the launch of the new Punto, the final quarter of this year "is that of our turnaround."

Though heavily indebted, Fiat Auto has been showing signs of revival in recent months. Fiat says this is partly due to a new strategy to provide more features and more design - and at a higher price.

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