The Hindu Business Line : Why Chrysler found India elusive

Daimler had set up shop in India too, first as a joint venture with Tata Motors before quickly being on its own. But it clearly had no plans to bring Chrysler products to the country.

Murali Gopalan

Mumbai, May 1 Chrysler’s inability to enter the Indian automobile market can be attributed to a combination of bad luck and a failed alliance with Daimler of Germany. And as the American carmaker filed for bankruptcy on Thursday, the prospects of an Indian innings looks even more remote.

Come to think of it, Chrysler’s top priority would be to set its books in order first and then keep its fingers crossed about being able to stay afloat in the medium term.

The beleaguered company’s new lifeline is Fiat SpA of Italy, which will take a 20 per cent stake initially and may even consider majority control once the $8-billion loans to the US Government are squared up.

Like all multinational car companies, Chrysler was keen to invest in India once the gates were thrown open in the early 1990s. Quite unlike the others, it had a comfortable head start and was planning to join hands with Mahindra & Mahindra to manufacture Jeep Cherokee here.

Things were progressing smoothly till M&M decided to team up with Ford Motor Company instead in 1995. Chrysler was reportedly nonplussed at the dramatic turn of events. If it needed to continue its India dream, the first imperative was to find a local partner.

This is when Bajaj Auto entered the picture. The Pune-based scooter-maker had also decided to throw its hat into the car ring. After all, this was a time when it was almost fashionable for every Indian company – be it Tata Motors, Premier Automobiles or Hindustan Motors – to get into making cars.

Bajaj had kicked off initial talks with Renault and Ford but could not make much headway because of the issue of equity control. This was also the time Chrysler had parted ways with M&M and saw an opportunity to join hands with Bajaj. The two companies began serious discussions for an Asia-specific car but things did not work out.

Was it the model in question that Bajaj thought would not click in India? Or did the Indian two-wheeler maker realise that the returns on investment in a car project would be slow in coming? The truth possibly lay somewhere in between but as far as Chrysler was concerned, the India chapter was closed for the moment.

Daimler merger

The next big move globally (in 1998) was the merger with German automaker Daimler AG. This transatlantic marriage was doomed to die primarily because of the inherent cultural mismatch between the two companies.

Daimler had set up shop in India too, first as a joint venture with Tata Motors before quickly being on its own. It clearly had no plans to bring Chrysler products to the country though the occasional story would do the rounds that this option was being examined.

From the German company’s point of view, the top priority was to promote its own product range without any risk of brand dilution with a Chrysler product. There were indications that it could bring in an Asia car with its other partner, Mitsubishi (in which it had a 37 per cent stake then), but even this did not materialise.

By this time, the DaimlerChrysler marriage was clearly on its last lap. The separation in 2007 was inevitable. The American carmaker was running out of ideas to stay relevant in a market that had changed quite dramatically in favour of fuel-efficient cars.

With the Fiat tie-up, it now remains to be seen how soon Chrysler gets back on its feet. The Italian company, of course, has a joint venture with Tata Motors.

Incidentally, Chrysler and the Tatas were in talks to jointly develop a battery version of the Ace pickup for markets such as Europe. In return, the Indian company would retail Jeep Wrangler in India. Will Fiat make this happen in its new alliance with Chrysler? These are early days yet.

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