Following an earlier exclusive report from CarAdvice in which the brand’s design chief, Roberto Giolito, hinted that the Punto could be absorbed as part of the Fiat 500 range as a five-door hatchback offering, it has become even clearer that Fiat is seriously considering what will be the best outcome for the brand with its next-generation B-segment hatch.
However, Fiat brand chief Olivier Francois told CarAdvice at the 2014 Los Angeles auto show that the decision making process is something of a “headache” when it comes to offering up a replacement for the Punto, which first went on sale in its current-generation guise in 2005.
“We are really working on it. We need a B-segment car. We need a new car. And it cannot be a loss,” he said. “That’s a headache.”
Francois says the Fiat Punto replacement needs to make the company money, but admits that in the segment in which it fights, that’s a hard task.
“B-segment is the worst thing in this moment. We have seen, it’s extremely competitive – our competitors do great cars. Let’s face it. The [Renault] Clio is a good car, the [Peugeot] 208 is a good car, the Citroen [C3] is a great car. They’re all good,” he said.
“So what are we going to do better, and why would we make money where they lose money. They all lose money. So once we have the beautiful object, what do we do?”
Francois indicated that it isn’t as simple as adding the Punto to the 500 range, or even making it a retro-inspired take, possibly known as the 600.
“This is challenging. We are addressing it. We have a couple of ideas about how to address this, but it is intellectually more challenging,” he said.
“It could still happen. I mean, I don’t know what Roberto told you, but yes, it is a conversation we are having as we speak. Either, or. That’s an open question, and that’s the best question, I think that’s the most important thing at this moment,” he said.
“I know what I’d like – I won’t share,” he said.
“The car physically exists, we’re exploring. But we need to find a business case – that’s a problem. When it comes to small cars: why do we want a small car? Why? Maybe because I have 10 million customers in Europe waiting for a new one.
“Because if I will satisfy 10 million customers, which is huge, if I do that losing money, maybe it’s better to leave them with the Punto,” he said.
On the notion of further expanding the Fiat 500 range beyond the regular three-door hatch, 500L MPV (and 500L Living seven-seat model), and the newly introduced 500X compact SUV (which shares parts with the Jeep Renegade), Francois said the brand needs to assess the risk of doing so.
“Theoretically we can do more,” he began. “Bigger or smaller. Nothing is confirmed now. For two reasons: we will have to decide this, but in the plan – the five-year plan – you have new cars, I don’t think there are other evolutions in the 500 family in that plan.”
Francois said that being able to share costs with another brand in the FCA portfolio significantly impacts the costs involved.
“500X is really going to be the proof in the pudding. I’m extremely optimistic. We believe in what we see. If the car really flies, then we will probably reopen the menu of possibilities that we have, and which is already explored, it’s already figured out. We know what we could do,” he said.
“And the other thing we need to look at, even if we have a success with the 500X, is that you don’t want to kill mother goose. The Fiat 500 is my only chance beside the functional family to create brand equity,” he said.
“To generate an extra margin, which is so important when you sell little cars in a mass market like us, this brand equity is crucial. Because of this I have to be careful that we do not dilute this 500 brand DNA within this, that we cannot spread it too thin.
“I think there’s still space for a couple of models, but we have to be careful. We have to see two things – is the 500X going to be the success we expect, and if so, maybe, you know, surveys, clinics, speaking with customers [to see] how many more we can do before taking a risk on the brand equity,” he said.
“But Mini shows us that it can be done, and they’ve done it successfully. I appreciate what they do,” Francois suggested.
“The 500X is a great program because it is shared with Jeep. The breakeven is lower. That’s the key,” he said of the new baby SUV.
“It’s a bigger segment, so there’s more margin. Crossover is a cash cow. 500X checks all the boxes,” he said. “When you share, your breakeven is half. Then you start talking – I’m going to make some money, you know? Your risk is half. So in this case, I cannot share, so there is a risk.”
Fiat Australia is yet to confirm the 500X for local launch, though it is highly likely to go on sale before the end of 2015. The 500L is also yet to be confirmed.