Fiat returns to US with low-priced 500

Italian automaker Fiat is returning to the US market and taking aim at the Mini Cooper, saying its peppy Fiat 500 subcompact will cost $15,500 -- almost $5,000 less than the Mini -- when it arrives here next month.
      
Fiat also named 130 US dealers who will initially sell the car in 39 states. Fiat, which took over management of Chrysler Group last year, gave Chrysler dealers first choice on the franchises but required them to set up separate sales and service areas for a more European boutique feel.

The 2012 Fiat 500, a three-door hatchback with rounded styling that evokes the original 500 from 1957, will be Fiat's first vehicle in the US since it pulled out of the market in 1983 because of rust problems and other quality issues. The company unveiled the North American version of the 500 at the Los Angeles Auto Show yesterday.

A convertible version of the 500 will come to the US next year, with electric and high-performance versions the following year. A four-door version also is planned.

The 500 has been popular in Europe since it went on sale in 2007, and the North American version will have many of its characteristics, including a manual transmission option and a wide variety of colors and accessories for personalization. But it's also tailored for US tastes, with upgraded heating and cooling systems, a quieter interior, cushier seats and a bigger fuel tank.

The North American 500 also has Fiat's new, 1.4-litre, four-cylinder Multiair engine, which improves fuel economy and emissions by controlling air intake. Fuel economy hasn't been announced but is expected to be higher than 40 miles per gallon (17 kilometers per litre).

The 500 arrives at an uncertain time for small-car sales, which were rising in 2008 as gas prices jumped but have fallen this year as gas stabilised under $3. US buyers have been flocking to crossovers and trucks this year.

But Fiat's US chief Laura Soave said last week that the company predicts Americans will eventually downsize, especially as fuel economy rules tighten.

She also said one reason small-car sales have been weak in the US is a lack of good choices. Until now, buyers who wanted a sporty Italian car had to pay $100,000 or more for a Ferrari or Maserati. One way Fiat was able to hold down the price of the 500 was the decision to build it at the Toluca, Mexico, factory where the Chrysler PT Cruiser was made until this year.

Fiat hopes to sell 50,000 Fiat 500s in the US and Canada in 2011, or about the same as Mini sold in those markets last year. As more models are added, the company is targeting 100,000 sales by 2014.