Fiat’s top boss Sergio Marchionne has indicated that the Italian car brand is seriously considering a low cost car brand that will take on the likes of Nissan’s Datsun and Renault’s Dacia. This move from Fiat comes at a time when Marchionne is thinking of taking the Fiat brand of cars up the value chain. Once that happens, enough space to squeeze in a low cost car brand may be created. However, Fiat’s low cost brand might not be built in Europe owing to the high labour costs. Like Dacia and Datsun, the Fiat low cost car brand could be built in emerging countries like China and India, and could also be sold in such countries.
If Fiat indeed joins the low cost car brand brigade, the car maker will be the latest among the long list of car makers betting big on the fortune at the bottom of the pyramid. More and more car buyers in developing countries across the world are seeing a rise in their disposable incomes, leading to big purchases like cars. However, the cars sold in developing markets need to be built to a price if they have to stand a chance of appealing to value conscious car buyers, whose expectations from a car are quite different from car buyer from developed markets.
So car makers like Datsun and Dacia have been using older car platforms for their low cost car offerings. For instance, the Dacia Logan sedan and Duster SUV are based on the Nissan BO platform, a platform that underpinned the previous generation Renault Clio. Similarly, the upcoming Datsun hatchback for India will use the K11 platform which was used by the previous generation Micra. Volkswagen too is said to be looking at using the previous generation Polo platform for its new low cost hatchback and sedan models targeted at India and China.
Given these developments, expect Fiat to also use its older car platforms for its low cost car brand. Older car platforms are being used by car makers for low cost brands to keep development costs to the barest minimum. with Dacia demonstrating to the car world that an older platform can still be used as the base for some very successful low cost car models, expect this tribe to only grow in the coming years.