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Fiat's return a test-bed for other potential markets

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Italians use Australia to plan their global assault

Fiat logo15 Nov 2006

AUSTRALIA’S red-hot new-car market has become a test bed with which Fiat Cars will gauge the success or failure of its global expansion strategy.

That is the unequivocal message from Fiat Cars president Luca de Meo, who made a flying visit to Australia for the first time this week in a symbolic vote of confidence for the Italian family-car brand Down Under.

Mr de Meo said Australia’s mature new-vehicle marketplace provided an ideal yardstick to measure the potential success of Fiat’s reintroduction in other nations.

"This is part of a strategy of re-internationalisation for Fiat. If we are able to create a sound business here, it will be proof that we can go globally basically everywhere," the most senior Fiat Cars representative ever to visit Australia told GoAuto in an exclusive interview on Monday.

Asked if the Australian experience will be used to measure the potential of the Fiat brand in other countries, Mr de Meo said: "Absolutely. It’s not similar to any of the emerging markets – this is a mature market – so if it works here it will probably work more easily in other countries. So, yes, Australia is a test market for us.

"This is a very competitive market. There is local manufacturing and there are many brands here. You have the Japanese, the Koreans, the Americans, the Germans, the French and the Italians, so people are pretty well educated in automotive terms and it’s good for us to be here."A man who went from head of Lancia marketing to the top job at Lancia and then Fiat Cars – within just four months! – Mr de Meo said Fiat was in a position to capitalise on the trend towards vehicle downsizing in Australia, where the popularity of diesel models would also aid the historic European brand’s attempt to reposition itself as a chic, made-in-Italy car marque to rival other European marques.

"I think Australia is a good platform for us to understand whether our strategy of repositioning Fiat – making it more of a fashionable brand, not being just a cheap and basic car, but more technological, more of a made-in-Italy kind of brand – is going to work," he said.

"This is a very competitive market, consumers are very sophisticated, you have competition here from everybody, it’s much more of an open market compared with Europe. There’s sensitivity on price and model positioning (which) is certainly challenging, so if it works here it will work in many other regions of the world as well."Mr de Meo said that while the success or failure of Fiat in Australia had wider implications for the brand’s reintroduction elsewhere, it would not have a direct impact on Fiat Cars’ global business model.

He stressed Fiat, which was relaunched by Ateco Automotive in Australia in July with the light-sized Punto hatch after the passenger car brand’s absence for almost two decades, would first concentrate on its dealer network and market positioning.

"For us in this first phase, quality is more important than quantity," he said.

"The priority for us is to find the right dealers, make them profitable, set the right processes to give good service to the customer, build the right image and get on board the right people so that people behind the steering wheel are the right people to position the brand.

 center imageLeft: Fiat Cars president Luca de Meo with Fiat Punto (below).

"Things like residual values and price positioning: these are the important things at this stage. If we are perfect in execution the volumes will come."Crucially, however, he said that while the 400 Punto cars expected to be sold here this year were more or less in line with sales targets – and comparable to rivals from Peugeot (206), Citroen (C3) and Volkswagen (Polo) – at least 5000 annual sales are required by 2010 for the exercise to have been deemed a success.

"Our pricing strategy is a kind of premium strategy in the segment, so we compare ourselves with the other European manufacturers, particularly the French. So if you compare the Punto’s (sales) performance it’s doing pretty well.

"But if you want a figure, we need to move to 4000 or 5000 cars at least (per annum) to make the business reasonable. I’m saying that for Fiat the company, but I’m looking at it more from an Ateco point of view and a dealer point of view, which is one of the most important things.

"If people like Fiat, they come to buy the cars without being pushed, the service level is good and if customers come again, those things are important to me because it’s not the 5000 or 10,000 cars that I’m going to change my business model around the world for."Asked when the development phase ended for Fiat in Australia, Mr de Meo said: "When you look at the introduction of a brand you will want to know in three or four years whether your strategy is working or not.

"So I would say that by around 2009 or 2010 we will need to close the first phase of the plan and see where you are," he said.

"Hopefully from a structural point of view we will have achieved some of the objectives, but I’m pretty confident because we have the right understanding between the partner (Ateco) and the manufacturer, we share the same vision, we understand we are here to give them a service and to support them in their growth plans. They understand the market and they are very professional, so I think it will work."General manager for Fiat cars in Australia David Stone said a "critical mass" of 5000 Fiat sales a year was "achievable and realistic by the end of 2008".

"As every month passes, the Australian shift to diesel helps us. As every month passes the market downsizes and we and other European brands are well placed to take advantage of that," he said.

Mr de Meo said Ateco’s track record augured well for Fiat in Australia.

"We have a very strong partner in Ateco here and it’s absolutely essential to partner with the right people that know the job, know how to fix the processes, know how to set down a dealer network, etcetera. So for us it’s a good experience and we want to stay here for a long time," he said.

"I’m pretty optimistic because Ateco has already proved with Alfa and other brands that they are able to launch and grow a brand."Ateco Automotive is believed to have invested millions to reintroduce Fiat in Australia and also holds the first right of refusal to the Fiat sister brand Lancia that goes global from 2008.

Ateco governing director Neville Crichton said it was about time a Fiat representative graced Australia.

"It has taken a little while to get a representative from Fiat," he said. "I think the first export came to Australia in 1901 so that’s 105 years. At least we can’t say we’ve been pestered!"Fiat’s had a few ups and downs over the years but certainly as a company they’re on the road to the future and the products that are coming out right now are proving extremely successful.

"Fiat is the fastest-growing brand in Europe at this stage and certainly the management team that runs Fiat will probably be the envy of virtually every other major motor company in the world.

"The new products that are coming on line means there are a lot of exciting things happening and in Australia we’re looking forward to a very long and prosperous future with Fiat."Mr de Meo said Fiat’s new-model rollout would take advantage of marketplaces the once-global car-maker had long turned its back on.

"Twenty or 30 years ago Fiat was one of the most international (car) companies in the world. We were present here, in Eastern Europe and in South America," he said.

"For some reasons – I don’t know what they are and I’m not really interested in that – we pulled out of many markets and now that we have recovered from one of the worst crises in our history it’s time to reconquer those markets.

"I’m not here to say we’re coming to conquer the world, but I believe that Fiat in maybe a few years will be considered among the best in selling and servicing compact cars, and will be recognised as a stylish, upmarket brand," he said.

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