Palio's Perfect Ps

When Fiat launched the Palio in India last month, nobody, including the Italian car maker, expected such an enthusiastic response. Fiat claims to have sold over 2,000 cars in the first 15 days since its launch, and a backlog of 3,500 pending orders! Certainly a creditable achievement for anybody in a depressed market, and more so for Fiat which has reportedly sold a total of only about 1,200 cars in the two months preceding the Palio launch.

So, has Fiat finally found a winner? The company's promising a car more spacious than the Indica, better looking than the Santro, and excellent power and style for under Rs 4 lakh. Plus, it's being endorsed by a tough, cool Sachin Tendulkar. So who wouldn't like to give it a dekko?

For Fiat, the Palio was make-or-break. All its previous models, from the Uno to the Siena, have met with little success and losses have been mounting. Fiat India closed the last financial year with a Rs 600 crore turnover and an estimated loss of over Rs 100 crore. Understandably, a company spokesperson hotly denies that the Palio is, as industry observers call it, "Fiat's last gamble". Says he: "It is just one of our products. After the Palio, by the middle of next year, we will roll out the restyled version of the Siena and then the restyled Siena Weekend. We are also working on the Palio diesel, which should be ready by 2002-end."

But the fact remains that the company didn't cut any corners while getting the Palio ready. It claims to have spent about $150 million to revamp the older Palio model which sold in over 40 countries. Designed by Giorgetto Giugiaro, voted "designer of the century", the new model was launched first in Brazil and then India. To keep prices down, the company is manufacturing 75 per cent of the car locally, and plans to raise this figure to 85 per cent by next year. Considering that the Indian consumer's perception of the Fiat hasn't really been very positive, the company has also spruced up distribution and after-sales service. Says automobile industry analyst Veeresh Malik: "Palio is a great car, but the Fiat brand-name is carrying baggage. It also carries the past crimes by Premier Automobiles, including lack of refund to many Fiat Uno bookings."

Says Omesh Dsousa of Leo Burnett, which created the Palio campaign: "With the launch, Fiat has left no stone unturned to reassure the Indian customer that they are committed to not just delivering superior cars but also a superior experience." Insists the company spokesperson: "Fiat has completed 100 years of its operations and we think it is now possible for us to show off the experience of the past one century. In India we have revamped our processes and network—we now have a completely new commercial team."

So far, market analysts feel Fiat has got its three Ps right: product, pricing and the high-end mid-range car positioning. While the 1.3 version gives you more power and size compared to the Santros and Zens for maybe a few thousand rupees more, the Palio 1.6, priced just under Rs 5 lakh, can compete with the lower models of the Ford Ikon, Hyundai Accent and Maruti Esteem, all almost in the same price bracket.

And with Tendulkar playing brand champion, the Palio also has a top-of-the-mind recall. The ad agency says that the campaign is talking to the mindset of an achiever and targets both first-time buyers and those who want to upgrade from the small car segment. Palio is "for those who want to own a big car but can't afford to".

The initial response to Palio has certainly made the competition sit up, but before they take the Palio head-on, they would like the initial euphoria to settle down. The success of the product, they say, does not depend just on the first few months. Meanwhile, Fiat says it wants to sell 50,000 cars next year. "With these numbers, we should break even by 2002-03," says the spokesperson. But despite the bravado, there are a lot of crossed fingers in the company's Mumbai headquarters. After all, in these difficult days, you cannot be sure of a recipe for success.