Fiat launches cute challenge to Mini

LONDON, England (CNN) -- While the United States celebrated Independence Day, Italy is experienced its own day of national pride. After years in the doldrums Italy's largest car manufacturer, Fiat, has unveiled the car that many believe will turn around the company's fortunes.

The Fiat 500 is aimed as a competitor to BMW's Mini, the second generation of which was launched in September 2006. Like the Mini (which was based on the 1959 Morris Mini Minor / Austin Seven), Fiat's new baby is based on an iconic classic.

Four million of the original 500 (in Italian 'Cinquecento') were produced between 1957 and 1975. And the car was credited with bringing the Italian automotive industry back from the ashes of World War II.

Cute looks aside, the new 500 shares few characteristics with its 1950s parent. While the original car was rear-engined, the new 500 is front-engined. Built on a modified version of the existing Fiat Panda chassis, the new 500 has been cleverly designed to mimic the proportions of the original 500.

Fiat realized the potential demand for the new 500 when it showed its Trepiuno concept car at the 2004 Geneva Motor Show in Switzerland. The Trepiuno was clearly a modern take on the classic 500 and was admired by industry commentators and potential customers alike.

The 500 range is expected to start from €12,500 ($17,000), vastly under-cutting its BMW rival while offering similar levels of customer personalization -- around half a million color and trim combinations.

The 500 is another example of Fiat's pioneering virtual prototyping process. Where previously the company would have built 100 prototype vehicles, now many of the characteristics of the car can be tested on computer, saving both time and money whilst leading to a 10 per cent improvement in quality.

Though cuteness and perceived quality are high on the design agenda, the 500 hasn't completely sacrificed practicality for style. Despite being shorter and narrower than its BMW rival (though a little taller), the 500 squeezes in 25 liters more trunk space (185 liters) and offers more rear legroom for passengers.

The original 500 was an ideal city car that has kept a large and loyal fan base -- seven-time Formula One world champion Michael Schumacher has two -- with thousands of examples still on the road, over 30 years after the last one rolled out of Fiat's Turin factory.

Fiat boss Sergio Marchionne told La Stampa, the Italian daily newspaper, "I want Fiat to be the Apple of the car world, and the 500 to be our iPod".

Fiat expects customers to make impulse purchases of the 500, as has been the case with the Mini. The Mini customer base is two-thirds female, and more than 60 per cent of Mini buyers purchase the car without first taking a test drive. E-mail to a friend