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Innovation & Design

Fiat's Retro Coup

With a remake of its 1950s Cinquecento, the once-ailing Italian carmaker shows design can be its competitive ace

Fireworks studded Turin's night sky on July 4 as 100,000 Italians gathered at Fiat's headquarters to celebrate the remake of the carmaker's historic Cinquecento—exactly 50 years after the iconic 1957 model made its debut. The new version of the cuddly car immediately struck a national heartstring: It has racked up more than 57,000 orders, prompting Fiat to expand annual production by 20,000 to 140,000 units at its Tychy plant in Poland. "It has the same elements of cuteness and seriousness as the original," says Fiat 500 designer Frank Stephenson.

Few would have believed two years ago that financially ailing Fiat could wield automotive design as its competitive ace. But that's exactly what Chief Executive Sergio Marchionne is doing. When Marchionne joined the company in June, 2004, from Geneva-based SGS SA, the world's largest goods-inspection company, Fiat was nearly bankrupt following years of lackluster models, poor quality, and spiraling costs.

Successful Formula

Marchionne was the fifth CEO in four years, but in his short tenure he has enabled designer Stephenson to put the company back on the map with a head-turning model that echoes BMW's smash hit Mini.

That's no coincidence. Stephenson spent 11 years designing cars for BMW and was the mastermind behind the 2001 Mini, which has sold more than 1 million cars since its launch. An American born in Casablanca, Morocco, he landed in Europe after studying at the Art Center College of Design in Pasadena, Calif. At BMW, which he joined in 1991, he also penned another hit, the sporty X5 SUV. In 2002, Fiat's management lured him to Ferrari where he became director of Ferrari-Maserati Concept Design & Development. In 2005, Marchionne moved Stephenson to Fiat, with the daunting brief of transforming Fiat's styling into automotive art.

Walking around the new 500 with a reporter, Stephenson points to the round headlight eyes, the "baffo" moustache, and the stacked taillights as characteristics that link the car to its predecessor. In fact, the new Cinquecento, which will be called the "Fiat 500" in markets outside Italy, is closer to the 1950s version than the new Mini is to the Rover Mini. But Stephenson's formula for remaking a hit 20th-century model into a retro chic money-spinner is the same. "It has to be love at first sight," says Stephenson. "Otherwise there is no reason to buy a Fiat."

Endless Options

It's true. As quality and safety become increasingly standardized, design is the biggest factor setting any model apart from the pack. Stephenson got the proportions and styling right on the 500, and then used Italian design flair inside and out to make people smile—or sigh with desire. Scroll through the 500 Web site and you stumble on "make-up," for options that personalize the look of the car. How very Italian.

Stephenson's talent is making cars "fun." At age 47, the boyish designer is full of mirth on the job. With the Mini, he wowed the automotive world with an endless array of options to personalize one's car, sparking unprecedented passions. Swarms of buyers named their cars and treated them like pets. Wheels, trims, and gadgets multiplied the personalization quotient. The option for a white roof with a colored body, giving the car an unusual two-tone look, drove production managers at BMW mad, but car buyers loved it—and paid for the choice. "The accessories really make money. We learned that from the Mini. The level of accessories bought for a Mini has gone way over anyone's expectations," says Stephenson.

With the 500, Stephenson takes the desire to get personal to a whole new level. Fancy a fragrance diffuser? Or, perhaps, an additional front bumper bar, a replica of the one worn by deluxe versions of the original 500? No problem. For the 500, Stephenson also devised a glass-roof option (for a bit of premium car cachet) and a pastel color scheme to make the auto stand out from other small cars on the road. How about mauve tinted a pale blue? "They are pastels brought back in a modern way," he says. "They set the car off and give it a retro look—a kind of advanced retro."

Alfa Romeos Next

Of course, all that design doesn't come cheap. The Fiat 500 starts at €10,500 ($14,700), and with all the nifty extras it reaches €14,500 ($19,900). That makes it cheaper than a Mini, but it's clearly an upmarket city car of the same ilk.

Much credit goes to the engineers for crafting a peppy small car that handles well, in itself a revolution at Fiat. But it's the 500's design that is going to stoke sales—or at least that's the hope as Fiat starts churning out customized 500s from its Tychy plant in Poland. For his part, Stephenson is already on the way to his next assignment: designing a hot new lineup of Alfa Romeos, which will pave the way for the sporty brand's all-important reentry into the U.S. market in 2009.

Marchionne plucked another design ace, Pininfarina's Lorenzo Ramaciotti, to join Fiat as group chief of design as of Sept. 1. With Ramaciotti, a veteran designer of Ferraris, on board, Fiat's drive to seduce buyers with Italian good looks has only just begun.

Edmondson is a senior correspondent in BusinessWeek's Frankfurt bureau.

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