Fiat Unveils Car to Challenge VW in Europe

Italian industrial giant Fiat unveiled a $1-billion gamble Tuesday in a bid for supremacy in the highly competitive European car market.

In a splashy multinational debut, Fiat launched a new compact hatchback, called the Tipo, designed to compete with the dominant Volkswagen Golf in the West European family car market.

Fiat expects to sell 300,000 of the cars a year, about half in Italy and the rest in other European Communities nations, company President Vittorio Ghidella told reporters at a news conference held simultaneously via satellite in Rome, Frankfurt, London, Paris and Madrid.

Fiat has no plans to export the Tipo to the United States, he said, citing a U.S. market bumper-to-bumper with Japanese and other Asian imports and the high retail costs imposed by the weak dollar.

The Italian conglomerate is now second to Volkswagen in European automobile production, although its Uno model is Europe’s best-selling subcompact car.

The name of the new model, Tipo, can be translated either as “type” or “character,” and Fiat is advertising the car as “typically Italian in taste and temperament.” It is designed to remedy Fiat’s weakness in compact car sales by replacing the moribund Ritmo model, which had European sales of 62,000 last year.

Volkswagen sold 845,000 Golfs in Europe to head a tight compact-sized pack in 1987. It was followed by Ford’s Escort, with 635,000, and the Kadett manufactured by the Opel division of General Motors, with 615,000.

Produced at a factory at Cassino near Naples that is one of Europe’s most automated, the Tipo cost $1.6 billion to develop, Fiat says.

The Tipo has not been officially priced, Ghidella said, but Fiat spokesmen said it will cost about 10% more than the Uno, meaning that the most basic of eight models will begin at around $9,000. Diesel Tipos, using the Fiat engine currently installed in larger Regatta models, will cost more.