The Fiat 127 was seen as a replacement for the 850.
The car used the same 903 cc engine as previous models but later it was upgraded to an aluminum 1301 cc model. The body styles introduced at first were limited to a 2-door saloon and a 3-door coupe, but starting with 1980 the Panorama estate was made available, also in 2-doors, a trend at the time.

Basically the same hatchback car but with extra space at the rear, the 127 Panorama got powered by the same 1-liter engine making 50 hp. A 1.3-liter diesel engine was also offered, making for the smallest commercial one available for a passenger car at the time.