The new honorary chairman of Fiat, Umberto Agnelli, assumes full control of a company in decline, though pieces of a new strategy have already been set in motion. However, if Fiat is to revive itself, new product lines entering the market over the next couple of years will need to improve on the models they replace.

Following the death of Giovanni Agnelli, younger brother Umberto will now assume the role of honorary chairman of the Italian carmaker, Fiat Auto.

The loss is another blow to a company that has been in decline for several years.
Last year, Fiat’s sales fell by nearly 18% as its domestic market share began to contract. This was despite government legislation specifically on small vehicles and designed to help Fiat. A key problem area for Fiat is the standard of its products, which fail to match its rivals and are still perceived as being of inferior quality.

The launch of the Stilo model was a significant test of the company’s future success and unfortunately, sales did not match expectations. Quite simply, the new car does not offer the dynamic driving experience of rival Ford’s Focus, or match the quality of Volkswagen‘s Golf. The failure of the Stilo to capture the public’s imagination has hampered any chance of a revival.

One area in which the company has taken steps to reverse its fortunes is in its sales focus. For many years, Fiat’s strong sales figures have been bolstered by high numbers of fleet registrations, which boost volumes but affect per-vehicle margins. One of the reasons for Fiat’s decline in sales last year was that it focused on retail sales, which meant lower volumes but should help the company’s profitability in the long term.

The new Fiat products emerging in the next couple of years – the new Panda, Stilo estate and the large saloon car, need to significantly improve on the models they replace if Fiat is to lift itself from the doldrums.

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