 "Fiat takes guard for another innings in India")
Despite being in the market for longer than many foreign companies such as Honda, Toyota and even Volkswagen, Fiat has been struggling to gain a foothold. Europe's largest car maker, Volkswagen, which entered India in 2007, almost a year after Fiat, has a market share of 2.4 per cent compared to Fiat's 0.25 per cent. Its flagship hatchback, the Punto, accounts for less than three per cent of sales in the category. For a car that has been the face of Fiat in Europe for nearly a decade, the sales are particularly disheartening.
Breaking ties
What's more, the car maker has suffered as a result of its decision to break ties with its Indian sales and distribution partner, Tata Motors. The two had been using each other's showrooms to sell their cars since Fiat entered the market in 2006. In May last year, however, Fiat decided to go solo as it felt the joint showrooms were resulting in cannibalisation.
There are signs the break-up has been hard on Fiat. From a peak of 170, the number of dealers fell to 51 as of March this year after the company switched to its own exclusive dealers. Many of the Tata-Fiat dealers were even reluctant to come on board and make fresh investments for Fiat showrooms because of the low demand for its cars, 10-12 a month. Of its existing 51 dealers, only half are erstwhile Tata-Fiat dealers; those bogged down by costly real estate in cities and by concerns about Fiat's future went elsewhere.
The transition to exclusive Fiat outlets, which began in May last year, has impacted sales as well. Sales have more than halved to 6,933 units in 2012-13 from 16,073 units in 2011-12. Even BMW sold more than 7,000 units last year, despite its dealer network being nearly half of Fiat's.
"That is the cost of the transition, it was a cost required to be paid," says Fiat's former managing director, Enrico Atnasio, who handed over the baton to Basavanhalli. For the record, Basavanhalli is the fourth India representative of Fiat in six years. However, Fiat is not giving up just yet. Armed with a new product line for the next 3-4 years, a revamped sales plan and an aggressive marketing and promotion campaign, the car maker looks poised to switch gears.
"We will give Fiat customer what they deserve," said Basavanhalli at a press meet in Mumbai recently. The blueprint for Fiat's comeback includes the introduction of American and Italian premium brands across hatchbacks, sedans, SUVs and compact SUVs. This, the Turin-headquartered company hopes will push its market share in India to 5 per cent in the "foreseeable future".
"India for Fiat is an interesting concept because there is a clear vision towards all the aspect of the business from design to engineering," adds Atanasio.
Road ahead
Over the next four years, Fiat will launch as many as 12 models, including five brand-new products. The rest will be "refreshes" and upgrades of existing and new models. The number of launches will exceed what the Italian company had managed during the time it was in marketing and sales partnership with Tata Motors.
The company will also launch three compact SUVs, of which two will be under the Jeep brand again. Powered by small, sub-2 litre engines, the new compact Jeeps will compete against Renault's Duster, Mahindra's Scorpio and XUV500, and Tata's Safari Storme, to name a few. One, in the B segment (to rival the Scorpio and Duster), will come in 2015. This will be followed by a vehicle in the C segment (to rival the XUV500 and Skoda Yeti) in 2016. The new line of Jeeps will be the smallest in the world and India will be among the first countries to have them. The country, however, is no stranger to the Jeep brand. After World War II, Jeeps were assembled here in collaboration with Mahindra & Mahindra.
Fiat will use the Ranjangaon facility near Pune, a 50/50 joint venture between Fiat India Automobiles and Tata Motors, to produce some of the local parts for the Jeep. The vehicle will also share it engines with the Fiat Punto and Tata's Indica Vista. To gain an edge over competitors, Fiat will be betting heavily on localisation. The Jeeps, for instance, which are being jointly developed by the technical centres in India and overseas, will have around 90 per cent of their parts manufactured locally. Fiat intends to pass on the savings to consumers in order to compete aggressively in the market. The Jeeps will be sold at 32 dealers in 25 cities. However, the company is yet to decide on whether they will be sold through the Fiat branded outlets or have independent showrooms.
In addition to the Jeeps, Fiat will also debut a mini-SUV next year. This will be a sub-4-meter compact SUV, a segment which has drawn the attention of several car makers like Mahindra, Ford, Maruti Suzuki, General Motors and Hyundai recently. The B CUV (compact utility vehicle), what Fiat likes to call it, could be priced at Rs 5-6 lakh. The company is hoping to take advantage of the favourable excise duty structure (12 per cent) for such compact cars.
Fiat also plans to bring the Abarth, the racing version of its cars with superior driveability and premium interior, for the Fiat 500 and the Grande Punto in the coming years. Designed for better performance, the Abarth versions will be priced at a premium compared to the general versions of the same models. The company wants to position these products as aspirational and lifestyle products.
Makeover for models
In addition to launching new models, the existing cars are slated for a makeover too. An all-new version of the Grande Punto and the Linea will hit the market in 2014. A "special model" of both these cars will also be launched in 2013-14.
Besides launching new products, Fiat also wants to fine tune its brand focus, product distribution and after-sales service. It is tying up with banks to provide financial services, besides ensuring spare parts are easily available to consumers. It will soon launch Mopar (the parts, service and customer care organisation of Chrysler Group) in India to take care of all the component needs of Fiat vehicles. In addition, a new website and a call centre have also been launched.
Streamlining the organisational structure has also gained focus in recent years. Fiat has hired people in the mid and senior levels from other companies, including Tata Motors, to boost its sales, marketing, logistics and IT divisions. The operations have been overhauled with a single-man reporting format.
Fiat owns some of the most exquisite automotive brands globally: Ferrari, Maserati and Alfa Romeo, for example, in addition to the Chrysler brands. However, experts say it is not the investment or the company's background that matters to consumers - when deciding on a car, it is the promise of the brand that they care about. VG Ramakrishnan, managing director, Frost and Sullivan, South Asia, says, "It is important that Fiat wins the consumer's trust. There needs to be a programme to communicate to the consumer that it is here for long. It needs to establish the trust that it will deliver what it promises."