Jeep is critical to Fiat’s turnaround in India

For a company that has had the longest association with India, it is intriguing why Fiat still has not found its way around in this market.

Sales continue to linger around the 1,000 unit mark each month with new products like the Avventura and Punto Evo taking up a lion’s share. The Linea is part of this lineup too but its numbers are relatively modest in comparison.

One of the biggest challenges is on the retail front since the time Fiat decided to go it alone and not continue with Tata Motors. Typically, such a transition takes time especially when it comes to training, sales & service, availability of spares etc. Industry observers say this is more complicated in a diverse landscape like India where customer tastes vary from one region to another.

From Fiat’s point of view, the top priority is to ramp up numbers quickly. “Clearly, the company could do at least 50 per cent more with its existing range. The Avventura and Punto Evo could comfortably do 1,500 units between them,” says an industry source.

One major reason for this tepid showing is the fact that dealerships are going through their share of teething problems. In addition, the market is just about recovering from a long slowdown. “Fiat will now need to get cracking and articulate its product attributes clearly and aggressively,” adds the source.

While Abarth is scheduled to debut shortly, the real game-changer could be the Jeep brand which has been the lifeline for Fiat globally. Its sales (Wrangler and Grand Cherokee) are already over a million units which is a fourth of the Italian automaker’s total numbers. India offers a lot of potential too for a brand like Jeep.

The merged entity, Fiat Chrysler Automobiles (FCA), has targeted production of seven million vehicles worldwide by 2018. India’s share will, however, be a humble 1.30 lakh units from the Ranjangaon facility near Pune where Fiat and Tata Motors have their manufacturing alliance intact. By this time, India is projected to be the third largest producer of cars with five million units annually.

This, however, pales in contrast to China where output in 2018 has been projected at 7.75 lakh units. Still, as in the case of India, Fiat’s share would be minuscule in the world’s largest car market whose annual output will be nearly 30 million vehicles by 2018. The dominant players are Volkswagen and General Motors which jointly account for over six million units every year.

Last year, FCA had outlined its strategy for Asia-Pacific where it made known that the number of platforms in India would be up from one to three and models doubled from three to six, a list including Wrangler and Grand Cherokee. Ranjangaon will also see more engine and transmission lines in place by 2018. This is important not only from the viewpoint of costs but will also make India an important hub for exports.

FCA will join other brands like Renault-Nissan and Ford which have already sounded the bugle on their export plans from the subcontinent. The near future will see General Motors also join this list with its traditional base in Korea likely to take a backseat as costs rise.

One department where Fiat would be quite pleased with India is its technical centres in Chennai and Pune which are home to over 1,000 engineers. This intellectual pool is working on projects for FCA across the world which makes India perhaps the most important R&D base (after China) for Asia-Pacific.

Clearly, Fiat needs to step on the gas more aggressively and get into a more sustained pace of business in India. Over the years, it has started off with a bang on products like the Uno and Palio but just lost its way thereafter. Yet, customers were still willing to give the brand a second chance perhaps due to its long link with India which goes way back to the 1950s.

This was the time it got into an agreement with Premier Automobiles to make cars at the latter’s Kurla plant in Mumbai. However, the real big bang entry happened in the early ‘90s when India opened its doors to overseas investments and a host of formidable names entered the automotive arena.

It was, of course, a different world for carmakers and Fiat was already hitting the headlines for a super successful showing in Brazil thanks to Project 178. It was on this heady momentum that the company decided to start operations in India except that nothing worked according to plan. In addition, headquarters in Turin was coping with its own issues and little attention was paid to India. Over the last few years, however, change set in with a new CEO in the form of Sergio Marachionne and the merger of Chrysler.

Shanghai has taken over from Turin as the HQ for Asia-Pacific which means decisions can hopefully be faster. All Fiat needs to do now is to get its act together and not slip into the wilderness all over again.

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