Fiat's Product Line-up: U.S. Entry Strategy

 |  About: Fiat Chrysler Automobiles NV (FCAU)
by: Markham Lee

With all of the talk about Fiat (FIATY.PK) and Chrysler, there is one thing we can be certain of: the company is looking both to market its fuel efficiency technologies outside of its home market and to expand into the U.S. So, I figured it would be a good idea to take a look at their product line-up.

First, here is a link to their web site for the U.K. I'm not saying we'd get the same line-up in the U.S. but it is an English Language site and it appears to be probably fairly representative of their product line.

Next a couple of photos:

*All Photos Courtesy of Fiat

The 500

The Qubo

The Grand Punto (5 Door)



Looking through the cars they remind me of Ford (NYSE:F) Focuses (or is that Focui?), Honda Fits, Scions and Minis but with much nicer interiors than your typical compact car, and while these cars aren't exactly my taste they do sell quite well here so there is probably a market for Fiats in the U.S. I think it's going to be a matter of finding the right strategic partner, as well as providing the right branding message to American consumers.

If were to suggest an approach it would go same route as BMW took with the Mini when it was introduced to American market: something hip, quirky and generally different, which just happens to be cost effective and fuel efficient. The idea for this is that you can't build a brand around just being cheap, and since the cars do fit into the same general "appearance genre" as other cars with hipster appeal you might as build your brand around that. The idea would be to build a sense of cachet around the cars, so that they're something people will still want even if they can afford something more expensive.

E.g. they should be trying to compete with the Mini, Scion and VW Jetta as opposed to Corollas, Civics and Focuses, by selling premium versions of the cars they sell in Europe.

At the end of the day marketing Fiats as Italian Scions and Minis as opposed to Italian Kias will probably generate more sales, and build more brand loyalty over time, as your competitive edge is something beyond being simply being low cost. Plus if you have a customer base that includes people who wouldn't normally be in the market for an economy car, it provides you with an opportunity to make extra revenue/inflate your profits by selling various accessories and add-ons.

Part of Toyota's (NYSE:TM) success with the Scion models is that they're heavily customizable, which allows Toyota (and their Dealership network) to make a lot of extra cash per car sold thus making the cars significantly more profitable then your typical compact car.

Still, it's a couple of years before Fiat hits the U.S. market and we'll just have to wait and see how they're going to market their cars, position the brand in the marketplace, etc.

Disclosure: at the time of publishing the author didn't own a position in any of the companies mentioned in this article; the ideas expressed are solely the opinions of the author and shouldn't be viewed as financial or investment advice.