Fiat India and General Motors India are looking at the possibility of evolving synergies in their business operations, similar to the deal struck between their parent companies for the European and Latin American markets.
However, the Indian subsidiaries of the two international car majors will not immediately look at joint product development and marketing. To begin with, they will focus on joint vendor development and spares purchase. The two companies will, however, remain competing entities in the market.
Fiat Spa vice-president (international operations) Sigichelli told Business Standard today that Fiat is considering using General Motor India's logistics and spares depots to harness its own business. The two companies may also jointly undertake spares and component purchase from suppliers so as to bring down prices of these products due to high volumes. "This is at a preliminary stage. We are trying to implement the joint collaboration agreement for Europe and Latin America in India. The existing agreement between Fiat and General Motors does not include India. But we are looking into how it can be worked out," Sigichelli added.
As per the European and Latin American deal, the two firms will jointly develop and market cars. This cannot be done in India since the volumes are extremely low.
"We can think of a similar arrangement when our volumes go up to 1,00,000 cars per year and GM notches sales volumes of around 50,000 and more vehicles," he said. Fiat is targeting a 10 per cent marketshare in an expanded market of 1 million units by 2004. In India, while General Motors is tapping primarily the C segment of the car market, Fiat has revised it strategy and shifted focus to the small car mass segment. This year, the company expects to sell around 50,000 units of the Fiat Palio. Today, the company announced the launch of the special Sachin Tendulkar (S10) edition of the Palio as well as the Palio Sports and Palio Weekend.
Fiat is also launching a new Siena (the old model will be phased out) as well as the Palio Adventure and a CNG Palio during the year.
Sigichelli said there are no plans to export CBUs out of India "since the Indian production is not yet competitive in terms of cost". He added that though the primary focus will be on manufacturing and developing the market in India, Fiat is willing to launch CBUs as per customer demand provided the government reduces import duties.
Ramesh Adige, wholetime director, added that excessively high duties on imports were not allowing the growth of the car market in India.
Fiat is working on vendor development and several components are being sourced out of India. Exports of components will be increased from last year's $20 million to $50 million this year, said Vijay Chandorikar, vice-president, sales and marketing.
