The Hindu Business Line : Fiat India looks to steer back with renewed efforts

"We understand the issues Fiat has faced in the Indian market. Our focus is clear and we are here to stay," Dr Paolo Castagna, who took charge as the company's new Managing Director on June 1, told newspersons on Friday.

Dr Castagna admitted that Fiat's dealers in the country were not making enough money, customer service was not good, brand appeal was insufficient and market coverage was spotty.

"We have recognised the various roadblocks and understand the need to create the required customer confidence, making Fiat the most preferred choice. We need to streamline our operations and target our brand strategy at the premium end, being in sync with changes in the Indian economy where customers have high purchasing power and aspire to be different," he said.

According to him, a key ingredient for recovery will be improving the after-sales service and dealer networks, bringing them to international standards. The Indian outfit's situation was encapsulated in his portrayal of growth options - bringing in any of Fiat's classy, mass-market models requires localisation, which in turn needs sizable sales volumes to justify the investment. The alternative is importing smaller volumes of high-end cars. That will be risky if a good after-sales and dealer network is not in place.

The company, which has a production capacity for 60,000 units at Kurla, has been averaging 200-300 units in sales for the past couple of months.

At trial clinics, it has received positive response for the Panda and Idea models, but no firm introduction dates were disclosed.

On the brighter side, Fiat India is claimed to have a bank debt of just Rs 29 crore. The parent company wrote off losses to the tune of Rs 1,300 crore.

Fiat holds most of the equity in the Indian joint venture with Premier's stake reduced to 0.25 per cent after the last round of capital infusion. No capital infusion is planned this year, an official spokesperson said.

Dr Castagna declined to comment on media reports of talks between Fiat and Tata ascribed to a variety of shared interests from engine development to capacity utilisation at Fiat's Ranjangaon facility capable of producing 75,000 units. He also refused to comment on the likely divestment by Fiat India to bring aboard an investor and reported talks with the Hindujas to revive business fortunes.

"The question is correct, but you are asking the wrong person," he said, maintaining that Fiat India's shareholders would decide on the matter.

The company on Friday unveiled the Fiat Adventure Sport 1.6 petrol, priced Rs 5.58 lakh ex-Mumbai.

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