Fiat could launch a budget brand in the mould of Dacia as its existing cars move further upmarket. Sergio Marchionne, boss of Fiat, confirmed in an interview over the weekend that the decision was being mulled over following the success of the Romanian firm.

According to Marchionne, talk of a back-to-basics Fiat product has circulated for many years, but concerns had arisen around the profitability of such a project. Dacia has now proved low cost needn't mean low-profit (estimates suggest Dacia has an operating margin of nine percent), and the future of such a car is being considered much more seriously.

The 500 and Panda ranges would continue as part of Fiat's mainstream offerings, but with a near-premium billing to differentiate them from the cheaper model. Evidence of this can already be witnessed in the upcoming 500L and 500XL.

A separate brand name, like Renault's Dacia and Nissan's Datsun, would also be introduced to the utilitarian Fiat to further mark it out from other products. Names considered thus far include Innocenti, the Italian firm bought by Fiat in 1990 and best known for the Bertone-styled Mini of 1974. Other suggestions have included those that reflect the basic nature of the concept, such as ABC or 123.

Any Fiat sub-brand cars would be built outside of Europe to ensure the retail price target of 7,500 Euros (Rs 5.38 lakh) can be met. Non-European production capacity is now being analysed by Marchionne and the Fiat management as to its suitability for the project.

Fiat would not only be targeting emerging markets such as India and China with a new budget brand, but also many European countries. The ongoing financial turmoil has increased the appeal of “crisis cars” such as those offered by Dacia, according to reports in Automotive News Europe.