Fiat to sell directly in India

After 6 years of Joint Venture with Indian Tata, Fiat has decided to redefine some of the agreements with this important car maker. From now on, Italians will be in charge of their car sales and distribution with their own society. This will allow them to control in a better way the relationship with dealers and final customers and therefore increase their presence in India. Fiat and Tata have a Production and Distribution JV in India since 2006 but sales results for Fiat are not pretty good. In 2007 Italians sold 3000 cars, and 2 years later they jumped up to record of 23000 units of a range mainly composed by Fiat Linea and Punto, locally produced with Tata. But since that, sales have decreased dramatically and last year they delivered only 17000 units. Partly explained by the fact that Italians have not changed model range and Linea and Punto are losing market share because of the arrival of VW Vento (aka as Polo Sedan), Skoda Rapid, Hyundai Verna and Honda City.

India has become an important market thanks to its rapid growth and specially because of its total sales forecast for the coming years. Only 2.4 million people bought a new car during 2011 in a country with more than 1.1 billion, which means a New Car Ratio of  2 new cars per 1000 inhabitants (in USA, NCR is 41). These numbers indicate the high potential this market has and how important it is for all car makers to be there. Indian people love small cars. Therefore Indian A segment was world’s second largest after Japan and becomes a key segment for a A Segment key player such as Fiat. 41% of total market correspond to small cars, being Maruti-Suzuki ones the most popular. And close to it, comes B segment (Punto and Linea, among others) which counts 37%. These numbers confirm the importance of this market for a company like Fiat, whose market share could be stengthen by the arrival of a specific Panda/Uno for them.

A Fiat Caffè Dealership in India

It is my believe, that with this new step and its focus on new models, allong with its background making small cars, Fiat could reach 200,000 units, by the year 2016 in a market that will grow really fast. We will see.