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Fiat Chrysler gears up for next growth phase in India

Murali Gopalan | Updated on June 14, 2018 Published on June 14, 2018

New sub-four-metre Jeep will build on Compass’ success story

It was during the 2016 Los Angeles Auto Show that Mike Manley first spoke of the possibilities of a smaller Jeep for India.

“We have to make a true Jeep and the smaller we go on platform, the harder the dynamics are. We will need to ensure that it is a proper Jeep and not something that is dressed up. Therefore, we need to be very true to what Jeep stands for,” the Head of Jeep brand told a group of Indian journalists visiting the show.

Compact Jeep

Fast forward to the detailed five-year presentation made last fortnight in Italy when Fiat Chrysler Automobiles (FCA) confirmed that a sub four-metre Jeep was part of the product plan for India along with a three-row mid-size SUV. This is welcome news to its local arm, which is finally tasting success with the Jeep Compass after decades of plodding in its earlier avatar as Fiat.

Today, it is a rejuvenated FCA India chalking out a new roadmap with Jeep. There is really no space right now for brand Fiat, which has had some momentary hits like the Uno and Palio in the years gone by but is truly no longer relevant. It is amply clear that Jeep will be the way forward in India as is the case in other parts of the world.

As for the sub four-metre offering that could be a reality over the next three years, its potential could extend to Europe, Brazil and other regions even while India will be its debut market. In the process, the Ranjangaon facility near Pune will end up becoming an important “contributing hub” to FCA, while the technical centre in Chennai will continue as the intellectual base for global projects.

The presentation in Italy also referred to capacity at Ranjangaon being increased by 50 per cent, which means it will be up from 1.6 lakh units to 2.4 lakh units annually. This has clearly factored into account the new sub four-metre Jeep, which has the potential to do big numbers both here and abroad.

Interestingly, Manley had also indicated at the LA Auto Show that the smaller Jeep was likely to be positioned “right on top” of the Ford EcoSport while targeting the sub-four metre regulation in India to qualify for lower excise duty. “There are a number of vehicles that will succeed in India so long as they have the right content and therefore I do not see price as a barrier,” he had then said.

As Manley observed, while India is a very price-sensitive market, it still responds well to new launches/technologies as evident in other consumer products like cellphones. Customers are not deterred by the price tag so long as there is ownership pride, which is what Jeep endeavours to do.

Compass points to success

After its 2016 unveiling at LA, the Compass made its debut in India less than a year later and immediately caught the market’s eye. It has been clocking brisk numbers of over 3,000 units each month, including overseas shipments. Ranjangaon is the hub for right-hand-drive markets and there are already 10, comprising Australia, UK, Japan, Ireland, Singapore, Indonesia, Cyprus, Malta, and Brunei.

Going forward, there is no reason why the plant’s competencies will not be leveraged further to include left-hand-drive regions. After all, India is one among four manufacturing locations for the Compass (the others being China, Brazil, and Mexico) and plant capacity here can be expanded comfortably.

During the LA Auto Show, Manley had referred to the Compass as a true citizen of the world. “This is a very, very special vehicle for us. Not only is it our most global vehicle, which will be produced in four plants but it also opens up a number of the markets where we have not been in,” he had said.

Manley had also indicated that FCA would be open to the idea of talking with Tata Motors, its manufacturing ally at Ranjangaon, about opportunities “where collectively we could win and the market could win”. This could encompass areas such as engines, transmission, and various platform components while taking into account that a Jeep vehicle had “very, very exacting standards”.

India could be key

These are interesting times for FCA in India and it may well be a key part of the global Jeep growth story in the coming years. Considering that the brand doubled its volumes between 2014 and 2018 to nearly two million units, there is no reason why it cannot surpass three million units worldwide by 2022, which marks the end of the five-year plan period.

The bigger challenge in India is to ensure that critical areas like after-sales service, availability of spares, etc, are always given top priority to ensure that the bonding with customers stays intact. Jeep has taken off on the right note with Compass and strengthening the loyalty base will help in easier market connect once the sub four-metre and three-row mid-size SUV join the parade.

In conclusion, it is Jeep that is now going to be the face of FCA in India, which only makes good business sense. For sentimentalists, it perhaps means bidding adieu to Fiat even while the company has not made any official statement to this effect. The new generation of buyers will queue up for Jeep, an established global brand and a true-blooded SUV.

Fiat has run its course here and even while it has had a long association with India going back to the 1950s, there is really no reason mixing priorities. The Italian brand but will have to contend with the reality of a changing market and its inability to keep pace. Till then, it is ciao to Fiat while giving top priority to Jeep.

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Published on June 14, 2018
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