Fiat updated its cult model, the 126, one more time in 1987. The 1987 126 came with a new 704cc horizontally opposed twin cylinder engine mounted under the rear floor. The new location for the flat-twin engine meant that the 126 could now gain the added practicality of a hatch-back tailgate.
As well as a slight power increase (up 2bhp!) the 126 could now reach 70mph, although fuel consumption figures were relatively poor. Also production of the 126 had moved from Italy to Poland where the cars were assembled for Fiat by FSM. Production of this archaic model continued until 1992.