The Bravo Could Put Fiat In Overdrive

European drivers usually associate the Fiat name with one type of car--the snazzy subcompact that can navigate the melee of a Paris boulevard or the narrow streets of Tuscan villages with equal ease. Now, capitalizing on the success of its latest subcompact, the Punto, the Italian auto giant wants to elbow its way into Europe's midsize market, the Continent's most crowded and competitive segment.

It's hardly a sure thing. An earlier generation of midsize Fiats barely budged from the showroom, and rivals are rolling out new cars, too. But Fiat is betting on its new Bravo and Brava models, launched on Aug. 29, to solidify its comeback from a $1 billion loss in 1993. Fueled by a devalued lira and the hot-selling Punto, Fiat turned a $612 million profit in 1994. Sales are strong this year, but margins are wider in midsize cars, and Fiat needs a new winner before the Punto loses momentum. Hence the Bravo, a roomy two-door hatchback, and the Brava, a sedan with four passenger doors and a rear door that's a cross between a hatchback and a trunk. Says Fiat Managing Director Paolo Cantarella: "We are adding two vital pieces to our growth strategy."

The midsize market is the only segment that has withstood Europe's three-year recession, gaining 4.1% in sales since 1992, to 3.6 million last year. That's because the cars have attracted budget-squeezed families looking for the right mix of price and space. But the segment is dominated by such best-sellers as GM-Opel's Astra and the Volkswagen Golf, which contend for the market's top position. Fiat stumbled badly when it tried to break into midsizes six years ago with the Tipo. After a strong start, Tipo sales plummeted to just 46,000 last year, as drivers rejected its ho-hum styling and technological flaws. "The Tipo was never considered a car of comparable standing to the likes of the GM and Volkswagen," says John Lawson, an auto analyst at DRI/McGraw-Hill.

MORE POWER. But Lawson and others believe that Fiat has learned from its mistakes. The Bravo and Brava, designed and engineered in Fiat's Cassino plant in a record 32 months, are variations on the Punto theme of technological sophistication and sleek styling. The twins boast Fiat's brand-new five-cylinder engines to offer drivers the power of a larger car. Other features

include soundproofing to muffle exterior noise, the latest in easy-to-use controls, and a sleek, rounded body. Analysts estimate that the weak lira will permit pricing from $13,750 to $20,600--some $2,000 below the competition.

If Bravo and Brava take off this fall, they could help double Fiat's 1995 profits, which are surging anyway thanks to the Punto. Next year, Fiat plans to further widen its line by launching the A178 "world car" for the low budgets and rough roads of developing markets.

A flop, of course, would be disastrous. Fiat has spent $2.5 billion developing the Bravo and Brava and their engines and launching a marketing blitz. Fiat hopes to sell 100,000 by the end of the year and 350,000 in 1996. VW sells about 750,000 Golfs in Europe a year.

SALES SLUMP. Market conditions and the competition could still thwart Fiat. Although the midsize category has been resilient, overall car sales in Europe slipped 3.3% in July after government-sponsored sales incentives in France and Spain expired in June. The stock of unsold cars is on the rise. Carmakers from Peugeot to Nissan to Opel also will introduce new midsize models.

Fiat also has to worry about Renault, which launches its midsize Megane sedan on Sept. 5 to replace the aging Renault 19. The sedan offers the same styling and rear-door feature as the Brava, and analysts say Renault's established presence in the midsize segment might give it the upper hand. "Even if the Bravo/Brava are good products, a German or a French consumer might still think twice about buying a serious car from Fiat," says auto analyst Carlo Di Grandi of Paribas Ltd. in London.

The first Bravo and Brava owners will be hitting the autobahns and avenues in mid-September. That road test could shake up the entire European auto industry--or throw Fiat into reverse.

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