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Murali Gopalan

Mumbai, June 14 Fiat’s recent move to get into the driver’s seat at Chrysler and work out a revival plan for the US carmaker will have no implications for India in terms of Chrysler models coming into the country.

Equally, to expect this to translate into a windfall for Fiat’s local partner, Tata Motors, from the viewpoint of marketing the Nano in the US through the Fiat-Chrysler network is just “wishful thinking” for the moment, industry sources say.

In the first place, Fiat will have its hands full chalking out a product line-up strategy in Chrysler plants across North America. There are indications already that the Cinquecento (Fiat 500) will be a near-certainty, while other compact models from the Italian company’s stable could follow suit. The challenge, of course, is to get these products accepted in the US market, which is still inclined towards larger cars and sport-utility vehicles.

“Fiat’s main objective is to make a mark with its own products first in North America through Chrysler,” sources said. The other challenge is to keep the alliance going smoothly because the battle is far from over. Thus far, things look good because the American carmaker has been thrown a lifeline but to sustain this momentum will require a lot of hard work.

Neither company has been particularly successful in global alliances. Chrysler’s mega-merger with Daimler did not take off, while Fiat and General Motors had to go their own ways too after an equity crossholding deal did not quite deliver on the expected lines.

In India, Fiat has a joint venture with Tata Motors to make cars at a plant near Pune. Targets for 2010 are modest at 70,000 units annually. However, the Italian company plans to make a low-cost car exclusively for the sub-continent towards 2012, keeping in mind the huge potential of the compact segment.

Tata Motors, of course, has been the trendsetter here with the Nano people’s car that is scheduled to hit the roads here next month. The company has also made public its intention to enter the US (in addition to Europe) with the car two years down the line.

“It will be quite a challenge to position the Nano in this market because Americans prefer to drive large, spacious cars. Further, the Tata car will have to comply with safety norms in the US. This will involve lots of hard work on the engineering front, which could translate into more time too,” sources said. Whether the Indian company can keep its date for 2011-12, therefore, remains to be seen.

Effectively, this means that if Fiat were to even contemplate helping out in the Nano’s marketing (with Chrysler), this will have to be preceded by detailed market analysis, feasibility from the viewpoint of volumes, impact on brand positioning (with Fiat’s products) and so on. “Though Fiat and Tata products share showroom space in India, the equation may not always work in advanced markets where the threat of brand dilution is real,” experts aver.

Incidentally, Fiat has planned its own low-cost car for advanced countries such as Europe and would ideally like to push it aggressively in a large, profitable market like the US. This product, which will not sport a Fiat badge, will be dearer than the Nano and loaded with technology. “It will not come in cheap, for sure, because the low-cost term as understood in Europe is quite different from India,” sources say.

Fiat has, of course, reiterated that it values the alliance with Tata Motors but the India connect is still miniscule compared to the world stage. It has had jinxed innings here for a decade and just when it seemed as if it could even shut shop, the Tata joint venture happened and a new chapter has begun. By the end of the day, though, India is not going to be a critical growth driver for Fiat at least for the next three-five years when it is still in consolidation mode.

More Stories on : Cars | Outlook | Tata Motors Ltd

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