The head of Fiat's UK distribution company believes the brand is making good progress to transform its prospects and reposition itself ahead of what he thinks will be a concerted challenge, globally, for European brands from emerging companies in places like China.

Fiat UK managing director Andrew Humberstone also told just-auto at a press launch event for the Fiat 500 Convertible that he believes the progress Fiat has made in the UK market in recent years is indicative of the sea change in approach that European car brands need to adopt in order to survive. 

“Now is the time for European brands to position themselves ahead of the challenge that I believe will come from China in the future. The companies there are moving fast to acquire technology, develop better products and bring their brands to the international market,” he said.

Humberstone, who has been in his job for 20 months, points to a number of steps that Fiat has taken in the UK to transform its business and radically move perceptions of the brand.

In particular, he says that he has helped to turn losses around to get Fiat UK close to breakeven, despite an unfavourable exchange rate movement in the past year.

While a fair wind for small cars generally has helped Fiat in Britain recently, he also maintains that exiting the unprofitable fleet market and focusing efforts on the private retail sector has been crucial.

“Turin took some persuading, but it was absolutely the right thing to do. We'd been chasing market share and doing unprofitable deals and it was right to get away from that and to focus on what we do well. We have also been able to capitalise on important new product and we have the right product at the right time to rebuild our image in a positive way with the retail customer,” he says.

But he's not ruling out a return to an area of the UK car market that accounts for 50% of total sales.

“We'll go back in when the time is right, but we'll go back in when the economics are right,” he says.

And he hints that Fiat is not entirely ignoring fleet business. “We are working on some creative deals, but I would emphasise that there's a big change in our approach – it's now not about volume at all cost and chasing share. Negative margin contribution business is simply not worth pursuing.”

Selling swollen dealer stock has also dramatically improved cashflow. A stockpile of some 17,000 Fiat-owned used cars, valued at some GBP100m, has been reduced to just 1,900 today.

So Fiat's UK business is now almost exclusively private retail and market share is growing.

“I’ve targeted 5% on a dealer network of around 200,” Humberstone said. Market share is currently around 3.5%. As A-segment and small cars generally in the UK get a boost from the government scrappage incentive and the effects of recession, Fiat is well-placed. But Humberstone points to an A-segment volume lift of 34% this year to 20,310 units versus A-segment growth of 28%, taking Fiat's share up to 14.9% - boosted by the impact of the 500 model.

And he's quick to acknowledge the importance of product and effective marketing to transform the Fiat brand image. Residuals, he says, are now moving in the right direction.

And the 500 C is the next instalment in a line of products that have improved Fiat's overall brand image.

“There's been a huge shift in the customer profile and a massive change in the way the Fiat brand is perceived in the market. It is cool to be seen in a 500 and that extends to a very wide range of different people. People who would simply not have considered the Fiat brand a few years ago do now.”

Fiat says that advance orders for the 500 C already top 700 and the UK’s total allocation for the year will be around 1,500, rising to around 2,500 next year.

But you can't keep Humberstone away from the big picture for long. His knowledge of the Chinese auto industry is informed by his Fiat experience there, working with Fiat's Chinese partners. He also has plenty of respect for Tata after spending time in India.

As well as the threat to western brands down the line from newly emerging companies moving more aggressively to the international stage, Humberstone is troubled by a retail model that produces what he sees as a low rate of return.

Fiat in Britain has put some effort into revamping its dealer network and improving the dealer council, looking to improve dealer profitability. “Dealers have to become true partners in our business and have common standards,” he says.

“And the return on sales has gone up from 0.9% last year to 1.4% this year. That's above the industry average and we're pleased with that, but look at that number.

“You have to question the basis of the whole retail model when the return on sales is around 1%.”

Again, he thinks change is coming.

“I think changes to the way cars are retailed is coming. And the change will be driven by things like digital technologies and it will be very much customer driven, rather than manufacturer imposed.”

Dave Leggett