Buying a car means there are multiple factors that the potential buyer considers. Some of them off the top of my head when I associate it with a Fiat vehicle.
1. Quality of the product when it comes out of the showroom.
2. Ability of a normal person (read non-petrolhead) to maintain it that way for 5-7 years at least.
3. Advice from others around the potential buyer who might appear to him as more knowledgable on cars- could be colleagues/family/friends etc.
4. How long would this company stay here/ will they wind up their operations all of a sudden and what would happen to spares availability and resale value in such a case.
When it comes to Fiat, point 1 is someting we dont have much doubt on- they've got a very good product in hand. Unfortunately, thanks to their excellent build quality, their cars are heavier than the competition that uses the same MJD engine. This means others are able to prove on paper that their products are better than Fiat products. Examples are slightly higher acceleration figures, slightly higher FE etc. This is where the Fiat marketing department has failed to capitalize even on their strengths. Stability, ride comfort etc. are not that easy to quantify and they just left it there. If the competition is able to convert Fiat's strong points as weakness and Fiat could do nothing about it, that just means there is some work that need to be done in their marketing division. They were simply not able to sell thier strengths.
Point 2 was again a perception from the Uno/Palio days where the spares were expensive. Ford was also in a similar situation with Ikon/Fusion. Both the companies corrected themselves when it came to Punto/Linea/Fiesta/Figo. Only difference: marketing folks in Ford knew how to advertise and market the lower cost of ownership and put it across to people. The fact that Fiesta and Figo were selling in good numbers meant more people started giving confidence to the potential buyers based on first hand experience that the maintenance is not really as expensive as it used to be. This led to more sales and naturally, people are more comfortable going for a popular product.
Point 3 is a very subjective and in a lot of cases just based on perception/hearsay. Still, it has a lot of weightage when it comes to a new car purchase. If a potential buyer is planning for a new car instead of a 2-3 year old used car (especially in case of petrol versions where they usually don't have much on odo and plenty of life left in them), atleast 60% of them would state the reason as "I didn't want to take a risk with a used car and hence went for a new one." When a layman decides to minimize the risk on a new purchase, it would be difficult for him to go ahead with a purchase against a negative advice, which is unfortunately floating around in very huge numbers against Fiat.
Point 4 is something that is probably in the mind of a lot of people and is adversely affecting the brand image. PAL was our 'Fiat' and Mahindra was our 'Jeep'. It is difficult to change that image from commom man's mind.
PAL shut its shop, dragged down Peugeot down the drain as far as Indian market is concerned and screwed up the re-entry of Fiat into Indian market with the Uno. All this blame is still reflecting on the Fiat brand image as far as a layman is concerned, although Fiat had no control over the first two incidents. Add to this the fact that Fiat is still selling in very low numbers. Peugeot TUD-5 engine was still doing duty in Zen and Esteem even after the 309 was discontinued. So the fact that MJD is used in Maruti/Tata is no guarantee that Fiat will still be around even if their cars are not moving out of their dealerships. As someone rightly pointed out before, they don't even have a single product that sells reasonable volume now. Who can blame the common man if he doubts Fiat would wind up their India operations?
If good products from Fiat end up as duds in Indian market, the solution is definitely not to put more models into the market and get the 'market dud' tag for them too. The way I see the announced strategy, they've learned from at least some of their mistakes from past experience includig the Tata JV and want to ensure they correct the A.S.S aspect before they launch a new model so that they can change the perception at least from then on. If they launch the new models now, there is no guarantee that they would sell any better than the current Punto. Even once the service situation and perception improves, it is more difficult to market a 'flop' car than to market a 'new' car, even it the so called 'flop' is an international hit.
Disclaimer -
I'm yet another guy, like many others in this thread who has zero experience in marketing and probably thinks could have marketed the Fiat brand better than the big guys who currently manage the show in Fiat India.