Fiat takes on the world

It was hot-weather tested in Phoenix and cold-weather tested in Farmington Hills, MI, but don't expect to see the new Fiat Palio on the streets of these or any other U.S. or Canadian city.

A small hatchback, Palio is the first in a family of cars Fiat SpA has named Project 178 -- or world cars. Brought only to the U.S. for testing, including a stint at the company's research and development facility in Farmington Hills, the cars will be sold in developing countries around the globe.

The project becomes a passport to introduce more of the world to Fiat cars. With more than three years and $2 billion invested in the project, the world cars have become the life of the company, says Giovanni B. Razelli, world car project coordinator and director of Fiat South American operations.

The 178 project includes five models: a sedan, station wagon, pickup truck, van and Palio hatchback. All will be built on the same platform and designed to be sturdy, rugged and reliable, says Mr. Razelli.

Production and sales will start in Brazil and eventually expand to Argentina, Venezuela, Poland, South Africa, and Morocco. Phase 2 could include Turkey, Egypt and Vietnam, along with India and China, for plants and dealer-ships.

With a global name and cars designed specifically for developing regions, the Italis automaker has the potential to sell large volumes, especially if Fiat can land a deal in China, predicts Nigel Griffiths, DRI/McGraw-Hill automotive analyst. "That's really going to make it a powerhouse if they can pull it off," he says.

Even before Project 178, Fiat's presence in other markets, such as Argentina and Turkey, began to expand. But its biggest success is undoubtedly Brazil, where Fiat sold 18% of its vehicles in 1995, snaring 26% of that market.

"Today, Brazil comes right after Italy, not only as our second biggest market but also as our second largest manufacturing hub," Mr. Razelli says.

While Fiat continues to expand around the world, the company does not plan to re-enter North America any time soon, even though its Project 178 was designed to comply with U.S. safety regulations. Fiat pulled out of North America in 1984.