Fiat went into decline about 15 years ago, when it decided that if it couldn't beat the Japanese and the Germans, it would copy them. The firm gradually killed off a range of interesting sports and coupe cars, and began to concentrate on fairly ordinary saloons.

Quality and reliability improved, and costs were reduced, making Fiat one of Europe's most efficient car makers. It also solved its union problems, which wereas bad as British Leyland's (Italian medical students used to go around to workers' flats giving free advice on what diseases could result from working for Fiat).

But as the business improved, the cars became less exciting. The problem is that the Japanese and the Germans will always be better at making 'adequate' cars whose primary role is to get you there. The Italians' great contribution to motoring has been in building the cars that get you there with a smile on your face.

Paolo Cantarella has been managing director of Fiat's car division - which includes Alfa Romeo and Lancia - since the end of 1990. He is well aware that the company's cars have lost some of their brio in the past decade. And he knows that for Fiat to arrest an alarming sales decline - market share down from 52.8 to 46.7 per cent in Italy last year, and 14.3 to 12.9 per cent in Europe as a whole - it needs to recapture the lost magic, soon.

To that end, he has been given pounds 18.6bn to spend on new products up to the year 2000, which is more than any other European car maker is likely to spend. Eighteen new cars are in the pipeline.

Particularly important new models include a new Uno (the company's best-selling model), planned for late 1993. Sources in Italy suggest that it is a bold car, and is substantially roomier than the current Uno. The Lancia Delta, too, will be replaced late next year by a bigger, more up-market machine. A revised version of the Alfa 164 - one of the firm's most successful and desirable models - will be launched in Britain early next year.

But the most interesting prospects in Mr Cantarella's master plan are a range of new sports cars from Fiat and Alfa. They include a Fiat Spider (a drop-top two-seater, planned for early 1994) and a new Alfa Spider, also likely to go on sale in 1994. Hard-top versions of both models are also planned. These cars are the spiritual successors to the lovely Fiat and Alfa coupes of the Sixties which helped give Italy the reputation for making the world's most exciting cars (if not always the most reliable and rust-free).

'For Fiat to be more competitive, we have to give more to the customer. We need more cars, and more interesting cars,' says Mr Cantarella, 47, a mechanical engineer who looks uncannily like a younger version of Derek Nimmo.

He points out that new technology makes it cheaper and easier to produce speciality cars. 'As long as you stick to certain basics, such as an established floorpan, and use existing engines, it is now easier to launch new bodies and thus new models. Our forthcoming Spiders and coupes may use borrowed mechanicals from our saloons, but they will have completely different sheet metal and driving characteristics.'

e reckons that a range of sports cars will help the image of all Fiats and Alfas. But he is also determined to make even the saloon models more interesting: 'We're an Italian company and from an Italian company you expect something special, whether it's in food or clothes or cars.'

Clearly, he disagrees with some of the decisions taken by his predecessor, Vittorio Ghidella. Yet there is no denying that Mr Ghidella's decision to rationalise Fiat's vast range, and share common components among Fiat, Lancia and (later) Alfa, saved the company a fortune, even if it irked enthusiasts. It is from that solid foundation that Mr Cantarella can launch some tempting new cars.

He believes he can arrest the company's sales slide, despite the increasing threat of the Japanese, who will soon be allowed greater access to the now-protected Italian market: 'We're confident we can take a greater share of the European market outside Italy, and do much better in countries such as Britain. That will partly compensate for the greater competition we will face at home. Obviously, we will protect ourselves as much as possible in Italy, too.'

Fiat's factories, among the world's most heavily automated, are competitive with the Japanese, Mr Cantarella says. 'It's hard to compare our factories with the Japanese plants in Britain. Their cars are engineered in Japan and many of the parts are made there; we engineer, design and build our cars in Europe, mostly here in Italy. It's even difficult to compare our Italian factories with the Japanese plants in Japan, because so many of the parts they use are made by suppliers. They buy in about 75 per cent to our 65 per cent. Let's just say that, of the European makers, we are in the lead, and we certainly don't regard ourselves as being far behind the Japanese.'

A new Fiat factory opens next year in Melfi, near Bari, in southern Italy. It will build the new Uno and is likely to be the world's most advanced car factory.

Britain, which seems to go from bad to worse for Fiat, gives Mr Cantarella particular cause for concern. Of all the major Western European markets, it is where Fiat does worst: this year, its market share is 1.84 per cent (down from 2.07 this time last year), an absurdly low figure for one of Europe's biggest car producers. A little more than 20 years ago, Fiat vied with Volkswagen as the biggest-selling foreign make in Britain.

In the short term, Mr Cantarella is trying to improve Fiat's troubled UK dealer network, by enticing new dealers and investing extra money in the existing set-up. His knowledge of the British car market is surprisingly impressive, especially given that it is so small for Fiat. It is clearly a priority, for if Fiat is to prosper, it must do well throughout the EC. In the longer term, Mr Cantarella hopes the more exciting model range will tempt back lost buyers and entice GTI-struck youngsters back into proper Italian sports cars.

(Photograph omitted)

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