Fiat India may stop domestic sales of existing line up, focus on Jeep sales

Avishek Banerjee Jun 13, 2017

According to well-informed sources who requested anonymity, “FCA’s long term vision is to take the ‘Jeep’ brand on a bigger scale than the ‘Fiat’ brand, which is averaging 500-600 cars per month for all the current models. That makes it highly unsustainable for dealers to sell a mass brand with low volumes and makes more sense to switch over to a brand which is premium, ensuring higher margins, and also giving decent numbers. And ‘Jeep’ fits the bill since it’s a renowned brand across the globe with a good fan following in India. However, nothing is being firmed up by the company yet.”

It is to be mentioned that at present Linea, Punto and Avventura are the only three models being sold under the Fiat brand in India with the first two on sale (with mid-cycle refreshes) for nearly a decade. The company has already phased out Palio and 500 (imported as a CBU) and has dropped its plans to roll out an India-specific car that was supposed to be priced under Rs. 4.5 lakh.

One of the first companies to arrive in India, Fiat never managed to come out with any game-changing product to give it a kickstart. Over the last 15 years, even though the domestic passenger vehicle market reached 3 million units, their sales continued to nosedive. FCA India has managed to sell just 5,665 units (of all Fiat models) in 2016-17 translating into a market share of only 0.0018% of overall PV market.

When contacted, Fiat Chrysler India spokesperson refused to comment as the queries sent were related to its proprietary information. Fiat Chrysler global and APAC spokespeople also didn’t respond on mail till the time of going to the press.

For the period ending 31 Dec 2016, the company reported revenues of Rs. 515 crore and profit after tax of Rs. (-) 616 crore. As on 31st Dec 2016, the net worth of the company stood at Rs. (-) 242 crore. However, Fiat India Automobiles Private Limited (FIAPL), which is into manufacturing of engines and cars of both Tata and Fiat models, reported revenues of Rs. 3,501 crore and profit after tax of Rs. 314 crore during the same period. As on 31st March 2016, the net worth of the company stood at Rs. 2,780 crore. (The figures were flashed on Tofler.in)

Despite being in the red for the last many years, Fiat has invested US $280 million in the plant to support local production of Jeep. Its Compass compact SUV, which is the first product under the Jeep stable in India, is slated to be launched in August at around Rs. 20-25 lakh. By the end of 2017, the Jeep brand’s portfolio in India will consist of three new models comprising the locally-produced Compass, Jeep Wrangler and the Jeep Grand Cherokee. Furthermore, shipping for RHD markets outside India will start in the last quarter of 2017.

Kevin Flynn, MD, FCA India was quoted as saying to a leading business daily, “We see a great future in India and would like to grow profitably. India is undoubtedly one of the most complex markets in the world but we embrace the challenges.”

Puneet Gupta, South Asia Manager -Vehicle Sales Forecast, IHS Markit, stated, “Fiat has been continuously investing in India but has been unable to taste the success in their later innings. Though there is no doubt that Fiat has been able to learn the art of making in India and of Making for India. They have introduced products like Linea and Punto which are truly competitive in price and quality and were positioned in mass segments. Now we feel Fiat wants to attempt another innings but this time in premium segment by bringing ‘Jeep Brand’ in India. The products from Jeep Make are expected to come at an aggressive price and Fiat has been able to use frugal skills and expertise of their local teams and their supplier partners. This time they have also earmarked India to be an export Hub like other manufacturers like Hyundai and Ford. This should help them bring economies of scale and parallely give a world class car at a price which Indian consumers may love to buy.”

It may be recalled that Fiat India began their innings in India by allying with Premier Automobiles. Later on, it formed a 50:50 joint venture with Tata Motors to scale up its operations. Finally, it went solo in 2014 and now operates as Fiat Chrysler Automobiles India Pvt. Ltd. If the speculation turns out to be true, it will be the fourth time that the company would be revamping its operations.