Fiat reworks India strategy

Mumbai: Fiat is determined to put its India house in order after its horrendous first innings where nothing seemed to go right.

Alfredo Altavilla, chief executive officer of the Turin-based Fiat Powertrain Technologies, said the new alliance with Tata Motors gives the company “yet another entry into the Indian market”.

The plant at Ranjangaon near Pune has been earmarked to produce both Fiat and Tata cars with an annual capacity of 1.3 lakh units by 2010.

In addition, it will roll out 300,000 engines (200,000 small diesel and 100,000 petrol) and transmissions apiece.

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“This is part of our strategy to revamp the Fiat brand worldwide. It is a large investment of 650 million euros for the joint venture,” he said.

According to Altavilla (who is also vice-chairman of the joint venture, Fiat India Automobiles), the first product for 2008 will be the Palio fitted with the new 1.3 diesel Multijet engine in February, followed by the Cinquecento (Fiat 500) and Bravo which will be imported.

The third quarter of 2008 will see the Linea, the first car to roll out of the line at Ranjangaon, and finally the Grande Punto by the end of the year.

The company is also working on the replacement of the next generation of the Palio though this will take some time to be developed for India.

“We will make 70,000 Fiat cars and the balance will be Tata cars till 2010. This number will not drive us to be the leader in terms of market share. Fiat is keen on addressing the high end of the segments. We want to be seen as a premium brand in the B and C segments and not as a volume maker,” he reiterated.

It is here that the levels of service in the after-sales are critical. “You cannot ask the customer to pay a higher price for the vehicle, then forget about his requirements when it comes to service,” he said.

To implement the strategy, Fiat will apply most of the tools used in Europe and the rest of the world to establish the brand, starting with an iconic product like the Cinquecento.

“The sky is the limit and we are keeping our fingers crossed. If the four products work well in India, it could mark the beginning of a bigger success story,” Altavilla said.

Fiat and Tata are also keen on taking the alliance to other markets around the world.

“We have found some good common ground outside India in India outside the car business. The more we explore opportunities, the more we are convinced that there are good complementary skills between the two companies,” he said.

Latin America, for instance, presents a “good opportunity” and Fiat’s plant in Cordoba, Argentina has been revamped. This is where the Tata Sprint pickup is proposed to be manufactured. Similarly, Fiat’s commercial vehicle arm, Iveco and Tatas have been in talks.

”It is possibly a little too early now for me to comment but I do see some opportunities,” Altavilla said.

He also made no bones about the fact that Fiat had committed three big mistakes in the past which had cost it dearly. “The first was the partnership; we chose the wrong partner and the relationship did not work out well. This affected the image of the company in the eyes of the customer,” he said.

The second, in Altavilla’s view, was to insist on bringing in a product (the first Siena) which was not completely designed to meet individual requirements and this did not pay off. “The third was the after-sales service and we could not provide the levels of quality. We started losing customers as a result,” he said.

However, each of these issues has since been addressed right from choosing the “best partner” in the form of Tata Motors to developing products for customers. Fiat has been doing clinic tests in India for 18 months with the Linea and Grande Punto even before the Linea was launched in Turkey.

“This is because we wanted to incorporate as many suggestions as possible from potential customers,” he said.

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