Fiat’s Flat Tire in India

23 10 2010

 At a time when the car market is booming in India, one company that is still in rut is Fiat. Fiat announced the day before yesterday that it would create its own retail network to push Fiat cars. Currently, Fiat cars are sold through Tata Motors’ dealer network.

Fiat is a well-known brand in India, having been one of the 2 big car brands in India right through the ’60s and ’70s. Fiat cars were manufactured by Premier Automobiles, a Doshi group company. Even after PAL decided to rename Fiat 1100 as Premier Padmini, the man on the street always called the car Fiat.  

Despite a head start, the history of Fiat in India is one of misses after misses. Post liberalization, Fiat set up a JV with PAL their earlier partner and launched UNO. It was an unqualified failure. The JV itself had its set of problems.

Then Fiat came on its own and launched Fiat Palio, Siena and Petra. After tasting some initial success with Palio, the sales started declining. Poor after-sales service, low mileage and limited dealer network were some of the reasons cited for this failure. Siena and Petra were bad products.

In 2007, Fiat realizing the need for a dealer network signed joint venture deal with Tata Motors. Fiat Automobiles India Ltd is a 50:50 JV between Fiat and Tata Motors. After this deal, Fiat launched some good models and backed it up with a visible marketing campaign. Fiat Grand Punto and Fiat Linea were definitely vast improvement over its earlier products and definitely in consideration for any car purchaser looking for a premium hatchback (Punto) or a sedan (Linea).

The journey of Fiat in India is not unlike Yuvraj Singh, its brand ambassador for Linea. Both have been underachievers. The talent is unquestionable, but somehow performance leaves much to be desired. Sometimes it is an injury, some other time it is a relationship issue and indifferent form at times.

Yet, in the April- Sept 2010 period, Fiat has reported a decline in sales when the rest of car market is booming. This must have forced the Italian bosses to look at a new strategy.

From the experience of Fiat and also Mitsubishi, it is pretty evident that having partners like PAL or Hindustan Motors, who had lengthy experience in  the Indian market, is more of a liability than a strength. Car companies who have come on their own like Hyundai, Honda (JV with SIEL, a passive partner) and Skoda/Volkswagen have done much better.

– G. Mohan

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2 responses

26 10 2010
Shiv Basu

“it is pretty evident that having partners like PAL or Hindustan Motors, who had lengthy experience in the Indian market, is more of a liability than a strength” – there could not have been a more apt statement to sum it all up. PAL and HM had a lengthy experience, happily enjoying an enforced monopoly. The Ambassador is an Oxford Series III that Morris stopped production in 1959; and the Premier Padmini is an 1100D that Fiat stopped producing in 1966. Indian population had to be content with these 60s models, paying current market price, for the next 3-4 decades. Hyundai had several advantges over Fiat and Mitsubishi. It entered the market at the first available opportunity, with a very strong determination, as is evident from their investments and approach vs. the other entrants from the 1990’s. And the value for money offered in a Hyundai automobile worked very much like the success of Maruti Suzuki. At the same time, their experience in competing with big players – Honda and Ford – in the international market, helped. Fiat, for all their expertise in car making, is still pretty much an ‘Italian’ car maker (unless you are talking Ferrari), lacking much international presence.

20 02 2011
arijit

I think again they did a mistake in choosing partners. I have a few such friends.. in perpetual personal angst of selecting the right!!! But sad when it happens to a company with so much thought going into that decision. Tatas have their own car problem which is not exactly setting India on fire…..thouugh I am a Tata loyalist myself…..I think they need to improve their car quality and marketing drastically. It was wrong for Fiat to think they can benefit from a company who is insecure about their own image and standing in Indian market..esp when Fiat is coming in the Sedan territory.

It can well be nobody else wanted to tie-up with Fiat. The Linea is a goos car… but when one can just spend a couple of lakhs more and get a basic Honda City…its tough to operate in that zone.

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