Fiat planning new Dacia rival

18 Feb, 2013 12:04pm

Fiat has announced plans to launch a low-cost budget brand to rival Dacia

Fiat is considering a low-cost budget brand to compete with the likes of Renault’s Dacia.

Chief executive Sergio Marchionne said: “We are wondering if there is space for a low-cost brand such as Dacia in the Fiat world.”

The idea is gaining momentum with the Fiat board as the market for premium and budget brands grows, with sales of the cars in between flatlining.

Marchionne would push Fiat upmarket while using a sub-brand to cash in on the low-cost sector that’s booming in developing markets like South America and India.

“We need to see if there is space left below after the Fiat brand moves up,” Marchionne added. The venture could see the revival of Innocenti – a low-cost marque bought by Fiat in 1990.

According to Marchionne, the viability of a sub-brand lies in manufacturing outside Europe. While Fiat’s Italian factories have excess capacity, costs are too high to profit from a low-price model.