"This change in image will doubtless take some time to accomplish," said Luca de Meo, head of the Fiat brand, in remarks to the business news agency dpa-AFX. He said Fiat would no longer offer "low-priced" cars.
Quality and new models would be the struggling Italian maker's route back to its solid profitability of old. It aimed to return to the black in operational terms by next year and achieve a surplus in 2007.
"If you look at recent months and project it into the future, then we are already on the way there," said de Meo. Fiat issued mid-year figures showing its operational loss had been reduced from nearly €400m to about €220m.
The Fiat division had deliberately dropped car rentals and European discounting practices that had been "profit killers".
De Meo promised a rash of new models to follow the recent new Panda, the Croma station wagon and the Frankfurt unveiling of the new-model Grande Punto.
By 2007 there would be five or six new models as well as five "face-lifted" models.
That would ensure that Fiat covered every growth segment in the European market, he said.
The Italian company is to offer a sports utility vehicle (SUV) developed jointly with Suzuki and is to bring out a successor to the Stilo, a compact on the market since 2001.
A further top priority would be better support for dealerships.
"Our dealers have made a lot of sacrifices. We now hope they can get some benefits back from us," said de Meo.
Fiat would not seek to expand into new markets until it had consolidated its position in Europe. Developing Fiat's "strong existing position in Latin America" also had priority over new markets. Fiat has claimed pole position in Brazil for several years.
The executive described a planned alliance with Ford as a "good sign" that showed Ford trusted Fiat's skills in making small cars.
The two companies signed a memorandum last week on a joint venture in small cars. Ford, which is the number-two U.S. manufacturer, agreed to base its new small European car on the same platform as the planned successor to the Fiat 500.
De Meo said Fiat would welcome other joint ventures but was not in talks on any at the moment.