Auto focus

Fiat Chrysler keeps India numbers realistic

Murali Gopalan | Updated on May 22, 2014 Published on May 22, 2014

As Fiat Chrysler Automobiles (FCA) targets production of seven million vehicles worldwide by 2018, the outlook for India is rather humble at 2.45 lakh units. And this at a time when the country’s output of automobiles in 2018 is tipped to be five million units making it the third largest in the world.

Earlier this month, Mike Manley, Chief Operating Officer of Asia-Pacific (APAC) and Head of the Jeep brand outlined the strategy in this part of the world over the next five years. India was, of course, a key part of this presentation where the heads of FCA were present along with its CEO, Sergio Marchionne. The good news is that the Ranjangaon plant near Pune will see production nearly double to 2.45 lakh units in 2018. In addition, the number of platforms will increase from one to three and models up from three to six, including models ranging from the Avventura and Linea to the Wrangler and Grand Cherokee.

China story

Interestingly, during his presentation, Manley indicated that FCA’s output in China would be up four-fold to 7.75 lakh units in 2018 from the present level of 1.95 lakh through two joint ventures. For a market which is tipped to be close to 29 million vehicles by that time, FCA’s share is little to write home about but understandable given that it has stiff competition from Volkswagen and General Motors who are the lead players in China.

The good news from India’s point of view is that Fiat is determined to hang in there and fight it out after going through a virtual rollercoaster ride over the last two decades. Despite a series of annoying hiccups at the front-end, the company was quietly building a base of extremely competent engineers at its tech centres in Chennai and Pune. Today, it is this cerebral team of nearly 1,000 people who are working on a host of projects for FCA across the world. To that extent, India is perhaps the most strategic intellectual centre for Fiat in Asia-Pacific.

Similarly, the Ranjangaon facility will see more engine and transmission lines in place by 2018. This will not only keep costs in check for the Indian operations thanks to greater localisation but could also double up as a hub for exports. Clearly, Fiat would like to make the most of what the supplier base here has to offer both in terms of costs and quality even while it takes its time about building market share through this decade and the next.

For the moment, the company is busy creating its dealership base. With a little over 100 outlets and an exciting product pipeline underway, Fiat is hoping to attract a new generation of car buyers who are unaffected by the baggage of legacy and keen on buying contemporary, stylish products.

The numbers for the next five years may look modest for FCA but will set the base for a stronger growth momentum thereafter. The company is only too aware that India is far too important a market to be ignored. Perhaps, from its point of view, it makes more sense to take one step at a time and not repeat the mistakes of the past.

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Published on May 22, 2014
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