The Palio badge originated on the Mark II Fiat 127, of 1977, where it was a trim designation rather than an actual model. The 127 Palio featured alloy wheels, a more luxurious interior, and a metallic paint finish as found on the 127 Sport. The Palio designation was also used on other Fiat models throughout the 1980s and 1990s in various markets.
Launched in 1996 in Brazil, as part of Fiat's "Project 178", the Palio was Fiat's first attempt to build a world car, the same basic design being produced in numerous nations around the globe. Four principal models were produced: hatchback, sedan, pickup, and station wagon, with different versions being built for different markets. The powerplants, both diesel and petrol, also varied from region to region depending on local production capability, legislation, and market requirements.
The basic chassis was a development of the European Fiat Uno but little remained unchanged. The entire structure was significantly stronger to be suitable on the rougher roads found in some of the markets for which it was intended, as was the suspension. The body was a completely new design by the I.DE.A Institute of Turin, which also designed the new interior. Some engines were also coming from other Fiat models, such as the Punto and the Bravo.
Production began in 1996 in Brazil and was followed later that year by a plant in Argentina. In 1997, production started in Venezuela, Poland for the European market, and Morocco (at the Somaca plant) whilst Turkey started building the same car in 1998. In India, assembly was at Pune in the new Fiat-Tata Motors factory and in South Africa by Nissan together the pickup version called Fiat Strada. Production in India and South Africa began in 1999, in Egypt in 2001, and in China in 2002. The Palio Weekend station wagon was launched in 1996 in Brazil and later in Europe. The station wagon is the version most commonly sold in Europe.
In 2001, the model had its first facelift. The new design was made by the Italian automobile designer Giorgetto Giugiaro. This facelift included new front and rear fasciae and a brand new interior. Also, new engines came for the Palio: the Fire 16-valve 1.0-L and 1.2-L and the Sporting, a 1.6-L 16-valve engine with 120 hp made in Turkey. The 2001 Palio was the first Fiat to be made in China, by Nanjing Automobile. In some markets, this generation included a Speedgear semiautomatic option. The Palio 2001 facelift is the ultimate version sold in Italy. In 2001, Fiat introduced for the South American market the crossover version, called Palio Adventure and based on the Palio Weekend. In Europe, the Palio Weekend was succeeded in 2003 by the Fiat Idea MPV.
In November 2001, the Chinese Fiat Palio debuted, with either the 60 PS (44 kW) 1.2-L or the 85 PS (63 kW) 1.5-L. The Siena sedan was added in November 2002, followed by the Palio Weekend in June 2003. The Siena and Palio Weekend were not available with the smaller engine.
A Fiat Albea, the sedan version of the Palio, was tested in Russia according to the Euro NCAP latest standard (offset frontal crash at 64 km/h). The Albea scored 8,5 points in the frontal test, equivalent to three stars. The tested vehicle was equipped with standard driver airbag and regular seatbelts.
The Fiat Perla, the Chinese version of the Albea, was tested in China by China-NCAP in three different tests: 100% front crash test with a wall (similar to the U.S. National Highway Traffic Safety Administration test), a 40% offset test (similar to Euro NCAP), and a side crash test. The Perla scored 8.06 points in the 100% frontal crash test, equivalent to three stars; 12.02 pts in the 40% offset crash test, equivalent to four stars, and 10,96 pts in the side crash test, equivalent to three stars; with an average result of 31 points and three stars. The tested vehicle was equipped with standard driver and passenger airbags and regular seatbelts.
The third revision was released in 2004, designed again by Giorgetto Giugiaro. It is basically a facelift from the previous models. The 2004 Palio was the first Brazilian model in the B-segment available with four airbags (two front airbags and two side airbags), parking assistance, and light and rain sensor. In Europe, the new model featured a redesigned front fascia and interior with rear fascia similar to Palio 2001 version. It has also a sport version called the Palio 1.8R' which has a new version of the General Motors 1.8-L X18XE Powertrain engine rated at 115 hp (ethanol) and 112 hp (gasoline), lowered suspension, new 14-inch alloy wheels, new seats, and other sporting features. The third generation of the Palio had huge sales numbers, even getting higher sales in some months than the VW Golf, the Brazilian best-selling car for over 24 years. It is currently sold as the Palio Fire Economy as a cheaper alternative to its posterior facelift, with alterations derived from the Uno Mille Fire Economy model. The top model is still Weekend Adventure version; it is equipped with a 1.8-L Powertrain Flex fuel engine with 112 hp (petrol/gasoline) and 114 hp (ethanol) at 5500 rpm, all-terrain Pirelli Citynet tires, and a higher/reinforced suspension kit but still with 4x2 drive.
Fiat India is manufacturing the 2004 Palio, with 2001-version interiors, at the Ranjangaon plant along with the Grande Punto and Linea. After entering into a partnership with Tata Motors, the Palio has been relaunched as the Palio Stile, with the 1.1-L Fire, 1.6-L Torque, and 1.3-L Multijet engines. Sales have been low at hardly 200 units per month.
The last Palio facelift was launched in 2007, in Natal, Brazil. The design of the body was inspired by the new version of the Grande Punto, which was launched in Brazil in the first quarter of 2008.
This fourth facelift included new front, rear, and side designs, but it kept the original chassis from the 1996 model, being marketed as the New Palio. It also has a minor change in the instrument panel with differences between the two variants sold.
The trims for this new Palio are ELX with the 1.0- or the 1.4-L Fire engines, both flex (ethanol and petrol) and the "sporty" version 1.8R with the current revision of the 1.8-L 8-valve engine from GM, also flexible. The new Torque engines were added to the Palio after the launch of the Grande Punto. The Palio Adventure introduced the new limited slip differential and new suspension for off road with front-wheel drive.
In 2015 the station-wagon variant has been renamed as Fiat Weekend, dropping the Palio name.
An all-new generation of Palio was revealed in October 2011, at the annual Fiat dealers' meeting in Mykonos, Greece. The official launch, however, took place on 4 November 2011, in Brazil. It is the first total remodeling since launch in 1996. The project, code named 326, was anticipated by the success of the new Fiat Uno in Brazil. One of the new versions will be the Sporting, a trim level known for the sporty versions of the Siena, Uno, Idea, Bravo, and Strada.
Fiat is joining utility companies Cemig and Itaipu to develop new electric vehicles for Brazil, with an initial batch of Fiat Palio cars scheduled to start testing later 2007.
Several competition and homologated versions of the Palio have been produced, such as the A6 class rally car, multiple Brazilian and South American champion of the A6 class with Brazilian Luis Tedesco as driver, and the Turkish Fiat Rally Team-created Palio Super 1600 Abarth rally car, with a 215-hp 1.6-L 16-valve engine and a six-speed sequential transmission. Turkey also boasts an N2 Palio.
The first generation design of Fiat Palio, that suffered very few structural changes from 1997, has been rated as highly unsafe by Latin NCAP in 2010, scoring only one star for adult occupants and two stars for children. Its air bag-equipped version scored three stars, although it is a vast minority in the sales mix. This will change with the Brazilian law requiring dual front airbags from 2014 on. Unfortunately, this is the safety standard of low-cost Brazilian cars.