Fiat mulls low-cost car brand

TURIN, Italy Tue May 20, 2008 9:40pm EDT

New Fiat Cinquecento cars are displayed at the Bologna motor show car exposition in Bologna December 5, 2007. REUTERS/Alessandro Garofalo

New Fiat Cinquecento cars are displayed at the Bologna motor show car exposition in Bologna December 5, 2007.

Credit: Reuters/Alessandro Garofalo

TURIN, Italy (Reuters) - Italy's Fiat (FIA.MI) is thinking about creating a new brand for a low-cost car it is developing, according to its chief executive.

"The next brand is going to be one that we develop ourselves," Sergio Marchionne told an automotive congress held in Turin, an industrial city in northwestern Italy.

In light of the success enjoyed by France's Renault (RENA.PA) with its Logan and the global media attention won by India's Tata Motors Ltd (TAMO.BO) for its upcoming Nano, Fiat and other manufacturers are working on their own cheap cars.

"The market has the space for what I consider a true value-for-money car," he said.

Marchionne said Tata, Fiat's Indian partner, could have a role in the creation of the new brand.

Fiat would take a decision in the next 12 months, he added.

ALFA IN AMERICA

Marchionne reiterated his intention to make Alfa Romeo cars in North America, though he had yet to decide where and when.

Fiat has sold its limited edition 8C Competizione car to U.S. customers but it has yet to return to the country with a full product range. It also has a presence through luxury sports car brands Ferrari and Maserati.

Marchionne expressed a strong desire to bring the updated version of Fiat's small Cinquecento (500) car to the United States, saying he was convinced it would be as much of a hit as it had been in Europe since its launch last July.

"It could probably carry the market," he said.

Ever since Fiat announced plans to bring Alfa Romeo back to North America, it has been approached by a number of parties offering their manufacturing facilities.

In tandem with the congress, representatives of the U.S. states of Kentucky and Georgia have spoken to Fiat about the possibility, according to sources close to the company.

The premier of Ontario is to pay Marchionne a visit on Wednesday to try to convince him to make Alfa Romeos at the Canadian province's under-utilized plants.

Marchionne said Mexico was a possible candidate because it would be a natural extension of Fiat's presence in Latin America, especially in Brazil where it dominates the market.

He also raised the possibility of working out of two manufacturing sites.

One issue Fiat had to address was the distribution network, he said.

"If we started with 100 dealers, I'd be happy," he said. "I don't think we need more than that.

"If we find an agreement with an auto maker that will allow for manufacturing and distribution wrapped together, we would do it," he added.

Fiat would not use the sales network of CNH CNH.N because its U.S. farming equipment subsidiary served a different market. Marchionne said Fiat had neglected Russia and was refocusing its attention on a country whose car market will soon become Europe's biggest.

"We will be active there in the next five years in all activities of the group," he said. Apart from cars and tractors, Fiat makes trucks under the Iveco brand.

(Reporting by Gilles Castonguay; Editing by Braden Reddall)

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