You are here:HomeCorporates

Fiat bets on SUVs and sporty cars in India reboot

Fiat bets on SUVs and sporty cars in India reboot

close

Mumbai/Milan:

Go specialist and go alone. That's Fiat SpA's new mantra for India as the Italian carmaker tries, once again, to crack the world's seventh-largest car market.

Fiat, one of the first Western carmakers to enter India but now the worst performing, opens a new, fully-owned 57-dealer network on April 1, hoping to attract more of the 1.2 billion people in the world's second most populous country.

Rather than launch a new model in the cheap, small car segment that dominates India and is ruled by Hyundai and Maruti Suzuki, Fiat plans to tap into fast-growing areas like sports utility vehicles (SUVs) and sporty cars.

It will bring its Chrysler Jeep SUV to the country this year and build a small version of the car there by 2015, as well as take aim at the higher end of the market with Abarth, the sports version of its 500 and Punto models.

Analysts think it will be a challenge, but could work.

"I think Fiat's focus is on launching a couple of niche products and rebuilding the customer experience," said Deepesh Rathore, managing director of IHS Automotive India. "It's painful but it's the time to tell the customer that Fiat is different from the image he or she has had in mind."

Fiat agreed in 2007 to build and sell cars with India's Tata Motors as foreign automakers began piling into the fast-growing market. But after three years of falling sales at dealers where Fiat's cars were displayed along the lower-priced Tata competitors, the Italian company decided in May 2012 to cut its distribution agreement with its Indian partner.

A reboot is certainly in order. While Fiat's 1.3 litre MultiJet diesel engine is under the hood of 75 per cent of India's small cars, the automaker sold just 203 Fiat-branded autos in February, the worst of any major brand, and its market share has dwindled to a mere 0.3 percent this fiscal year.

"We all believe that we have scratched the bottom of the barrel," Enrico Atanasio, managing director of Fiat India told Reuters. "(Our performance) is not what the brand deserves."

Now is not a great time for a relaunch. Car sales in India are set to fall this financial year for the first time in a decade, hurt by high interest rates and slowing economic growth.

Yet the potential is there. LMC Automotive expects India's car market, currently around 2.6 million vehicles, to grow to about 6.9 million in 2017. That's around half its forecast for western Europe, although well below its projections of 16.9 million for the United States and 31.5 million for China.

"India is a small, low-margin market for Western auto makers ... there is no indication of a near-term earnings upside," said Phillip Houchois, auto analyst at UBS.

"But if you think India will one day be like China, it's nice to be able to put down roots there."

With enthusiastic new dealers, Atanasio believes Fiat can end 2013 with 1 per cent of the market and aim for 5 per cent longer term. It plans to exit the year with 112 dealers, versus the 170 it had with Tata, and will continue to build engines and cars locally with the Indian company.

MINI JEEP, LOCAL TWEAKS
A boxy Fiat sedan, built by Premier Automobiles from 1964 as the Fiat 1100 Delight, is a familiar sight in Mumbai where many still ply roads as Premier Padmini taxis. But more recently, its Punto hatchback and Linea sedan have not caught on.

Fiat simply did not get the product offering right, Fiat Chief Executive Sergio Marchionne admitted earlier this month.

Fixing it means introducing the Jeep Cherokee and Wrangler models this year, to grab a piece of India's booming SUV market, which LMC Automotive sees reaching more than 1 million by 2019 from just 363,000 last year.

Fiat also plans in 2015 to begin production in India of a new mini-SUV Jeep currently under development, which will be sold locally and also exported to other markets, Atanasio said.

Fiat took control of Chrysler in 2009, and has slowly been adding the U.S. carmaker's brands to its stable worldwide. In all, Fiat-Chrysler plans to launch nine new or refreshed models in India in the coming years, Atanasio said. Recently, India was the only place where Fiat was selling just one brand.

It will not, however, launch a new model in the low-priced small car segment which accounts for around 70 per cent of sales in India as middle class families trade in their motorcycles for four-wheeled status symbols.

Instead, it will modify the models it does sell in India to suit local conditions, like the Linea sedan, built with a higher ground clearance for India's pot-holed roads.

"Fiat will have to get its pricing and marketing strategy right for this model (segment) if its wants to be successful in India," said Ammar Master of LMC Automotive in Bangkok.

Copyright @ Thomson Reuters 2013

Story first published on: March 27, 2013 10:50 (IST)

Tags: Fiat, Hyundai, Maruti Suzuki, Small car, Italy, Mumbai, Milan, sports utility vehicles, SUVs, Chrysler Jeep, Abarth, Tata Motors, Car

MORE FROM NDTV

FROM THE WEB

MORE FROM THE WEB
MORE FROM NDTV

For Profit Update,
Follow NDTV on Pinterest

Post your comments:

Social Sharing

Advertisement

Advertisement

 

More From NDTV

More From the WEB

Don't Miss

Advertisement

Market Data provided by © Accord Fintech.
© Copyright NDTV Convergence Limited 2014. All rights reserved.