Fiat India is going to launch a new variant of the Palio in January 2007. Termed Palio 1100 the car will have a 1100 cc engine (instead of the 1200cc on the current model) to benefit from the excise benefit on cars under four metres in length and with engines lower than 1200cc. The new engine will be less powerful than the existing one but would deliver better fuel efficiency.

The car will also sport new double barrel headlamps, bonnet, front grille and bumper all of which give the new Palio a modern, fresh look (as you can see from the picture). The rear light are also new as are the ORVMs (rear view mirrors). However the interiors remain the same and are actually quite outdated now. The car is expected to cost around Rs.4 Lakh ex showroom. Will Fiat get lucky with the Palio 1100, well with the new Zen coming in and the Swift & Getz already available at discounts it would be a tough fight.