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Fiat readies to give Palio new life after a long struggle in sales

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Italian auto manufacturer Fiat has decided to give its oldest surviving model, the Palio, a facelift and a major marketing push, thereby ruling out any phasing out of the model although it has been in production for over eight years.

The company will launch a refreshed Palio in the next three to four months with a “competitive price tag”, according to an executive from Fiat India Automobiles. The existing Palio (base model) is sold at Rs 3.45 lakh (ex-showroom, Mumbai).

In addition, the petrol engines — 1.1 litre, 57 bhp and the 1.6 litre, 100 bhp seen in the existing Palio — may either get upgraded to suit Bharat Stage IV (BS-IV) emission norms or may get replaced by engines that power another Fiat model, Grande Punto.

The Punto is driven by a 1.2 litre (FIRE) engine that develops 68 bhp of maximum power, as well as a 1.4 litre (FIRE) engine that generates 90 bhp of peak power. The 1.3 litre multijet diesel engine seen in the Palio is already BS-IV compliant and does not require upgradations.

Eleven cities in India will change to BS-IV norms from April 2010 as part of global emission control action aimed at containing harmful gases released by automobiles.

“Although the Palio has become an old model now, it continues to serve our strategic purpose of being the entry level model in our range, while complementing the Punto. It was, hence, essential to infuse some refreshments to the model to keep it under production,” said a senior executive from the company.

Though the company preferred to maintain secrecy about the product until its launch, sources say the new Palio may get a new grille and a new dashboard assembly, much on the lines of the recently launched and facelifted Brazilian Palio.

Fiat India will thus generate a major marketing push to reignite the demand for the Palio, which has considerably slowed due to fierce competition. Despite the price of the current Palio, considered aggressive, it fails to pull customers looking for other hatchbacks such as Hyundai i10, Maruti Suzuki A-Star and Chevrolet Spark, in a similar price band.

Sales of the current Palio are pegged at 250-300 units a month. In contrast, the Hyundai i10 clocks more than 5,000 units a month, according to industry officials.

Auto experts say a facelift by the company was expected. “A complete phase-out of the Palio will result in a huge void in Fiat’s model line-up in India, which will be difficult to afford,” said an expert.

The existing version of the Palio was launched by the company in April 2007, with an additional and highly efficient diesel engine. The four-seater hatchback was first launched in September 2001. Though initial sales were encouraging, it lost in succeeding years to intense competition, Fiat’s infamous service back-up and also due to car’s fuel guzzling nature.

Meanwhile, Fiat India is considering an upward revision of prices for the Punto and Linea after the end of the current quarter. The increase will be made to even out the rise seen in international metal prices and the impact of the euro, which has become costlier for its suppliers.