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Jeep in driver’s seat as Fiat rides in the back

Murali Gopalan | Updated on March 08, 2018 Published on March 08, 2018

Lifeline Success of the Compass is the best thing that happened to FCA in recent times

This SUV brand is clearly the face of Fiat Chrysler Automobiles worldwide

One of the highlights at the Geneva Motor Show, going by global media reports, was the dominance of Jeep at the Fiat Chrysler Automobiles (FCA) stand. In the process, the Fiat brand was relegated to a smaller stand.

To sentimentalists, this could be a sad turn of fortunes for an iconic Italian brand but the blunt truth is that it is Jeep, which is the centre of gravity for FCA. With annual sales of over 1.4 million units, it accounts for a large chunk of its overall numbers and profits.

It is also a near certainty that Jeep will grow even more strongly in the coming years thanks to the SUV boom across the world. The recently launched Compass has hit the bull’s-eye in strategic growth regions such as India and will be a key part of the Jeep growth story.

Small wonder that the brand has caught the eye of Chinese automakers such as Geely, which had informal talks with the FCA management on a possible alliance/buyout. Prior to this, Great Wall Motors, again of China, was reportedly interested in a Jeep acquisition though this turned out be a case of putting the cart before the horse.

In markets such as India, the success of the Compass is the best thing that happened to FCA in recent times. Never mind that it is a Jeep brand that is finally tilting the scales in its favour considering that in the original Fiat avatar, success was constantly elusive despite some promising starts.

India plan

There is no official confirmation when a Fiat-branded car will debut as part of the India business plan but for now, the Compass is keeping all stakeholders happy right from the company and its dealers to ancillary suppliers and customers. In all likelihood, it will be joined by the Jeep Renegade in due course of time to keep the growth momentum going.

Looking back, the Fiat story in India has all the ingredients in place that would actually make for a good film. This brand has had the longest association in the country thanks to the partnership with the then Premier Automobiles way back in the 1950s. The recall factor is still so strong today that the few hundred remaining black and yellow Padmini taxis of Mumbai are still referred to as ‘Fiat’ by their cabbie owners.

Given this strong linkage with India, it is still bewildering how this Italian brand completely lost its way when it decided to kick off operations in a big way in the early 1990s. This was the time the country had opened its doors to investments from multinational carmakers and big brands such as Daewoo, Peugeot, Hyundai, General Motors and Ford quickly queued upto throw their hats into the ring.

Fiat was part of this parade too and was already making news worldwide for its resounding success in Brazil with Project 178 and the Palio world car. For India, the plans were to set up a new plant near Pune but, in the interim, the Uno would be assembled at the Premier Auto facility near Mumbai.

This model was already being touted as the challenger to Maruti’s supremacy in compact cars and the Zen in particular. Customers just made a furious beeline for the Uno when bookings opened and the final tally was close to three lakh that was a huge number back in the 1990s.

As luck would have it, the script went completely out of control thanks to a labour strife at the Premier plant, which severely impacted production schedules. There were a host of additional issues to deal and the Indian company’s auto business was eventually hived off as a joint venture with Fiat holding majority control.

Effectively, this meant that the original plans for an all-new facility near Pune would now have to be shelved with the top priority being the Uno’s revival. It was clear that this was not getting to be easy even as rivals such as Hyundai, Daewoo and Tata Motors quickly got into the picture with their own compact offerings.

The Uno finally turned out to be an opportunity lost even while Fiat really pulled out all the stops with its next big offering, the Palio. Tremendous work had got into making it a cost-competitive product and the initial market response seemed to suggest that the company had a winner on its hands. Master blaster, Sachin Tendulkar, was signed on as brand ambassador and it seemed as if nothing could go wrong from here.

As in the case of the Uno, the company could just not capitalise on a dream start and a host of issues cropped up across the supply chain, including after-sales, which eventually caused a huge dent to the Palio brand. It was going to be difficult for Fiat to get back from here, especially with competition getting more intense as a host of new players began to enter the market.

Big break

A lifeline came in the form of Tata Motors, which saw a partnership being forged for joint manufacture and retail. It also meant starting all over again at the originally planned facility near Pune and the coming together of two brands meant that not all was lost for Fiat.

In hindsight, it perhaps was not the wisest of moves to go in for a joint retail drive where Tata and Fiat cars would be displayed in the same showroom. Naturally, things went awry and Fiat decided to go in for solo marketing even while the manufacturing alliance continued.

The big break, ironically, occurred during the 2008 global economic crisis when Detroit had its back to the wall and some of its famous residents such as General Motors and Chrysler were gasping for breath. Fiat emerged as the knight in shining armour for Chrysler and this paved the way for a new entity, FCA, which would draft a success story fuelled by Jeep.

It is to India’s credit that it has been identified along with three other countries (Brazil, Mexico and China) to manufacture the Compass globally. The vehicles made at the Pune plant are sold in India and also shipped out to all right-hand drive countries.

The Compass has been a huge success story in India thus far, which also puts in perspective the importance of Jeep in FCA’s overall roadmap. It also remains to be seen if the company will be open to having a Chinese shareholder such as Geely, which already owns Volvo Cars and has substantial stakes in Volvo AG and Daimler. Jeep is clearly the growth catalyst for FCA and the biggest brand in its stable. Brand Fiat, in contrast, will just have to get used to the idea of taking a backseat even while there is no telling when it will stage a strong comeback.

Published on March 08, 2018
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