In the 1980s, the sports car segment was evolving like never before and mid-engined sports cars were some of the most popular options. The Fiero was a popular option at first because it was compact with a mid-engined design. The pint-sized Pontiac was unlike anything else the brand ever sold before (via Hot Cars).
The problem was that the engineering was not there, and the engine compartment was prone to fires. There were so many fires when the car was first released that it sparked outrage among consumers and the automotive press. By the time GM rectified the problems with the engine compartment fires, it was too late.