Looking for solutions. The case of Fiat India

Photo by: TeamFiat.co.in

Photo by: TeamFiat.co.in

For the second month in a row, Fiat India sold more than 1.000 units, up a massive 66% on September 2012, and 8% on August 2013. It was the second best performance after Honda. Market share jumped from 0,3% in Sep/12 to 0,52% one year later. Of course there is still a lot to do as the market share continues to be quite marginal. However, Fiat proved that it can increase its presence in this important market by improving the service and products. After the introduction of Turbo engine and an entry-level version of the Linea, sales jumped 492% for this model. But how can Fiat achieve more? With the help of my Indian friend, Bharath Elango (a fan of the brand, and a happy owner of a Linea Multijet Emotion), I tried to investigate about Fiat’s position in this market and the possible things it could do in order to increase its sales.

Fiat plans to set up 100 dealerships by the end of this year (from 80 it has right now). This is certainly a good thing considering that this move helps the brand to increase not only the presence but the awareness among Indian buyers. Fiat is mostly known by car passionate and as my friend says ‘out of them only few have the courage to buy it’. Now the brand can have a better control of its final approach with the clients as it sells its cars through its own dealers. But sales is not only a matter of dealerships. Buyers will visit them if they are attracted by a product. And that’s the other field where Fiat has plenty of challenges/opportunities. Even if the Punto and Linea are good products with very competitive prices, they have been unchanged for years. The lack of news (with the exception of the engines) and the problems with service haven’t contributed either.

A local-built Uno could become a strong competitor to the popular Maruti Alto or Hyundai Eon/i10.

A local-built Uno could become a strong competitor to the popular Maruti Alto or Hyundai Eon/i10.

The introduction of new models is certainly the second step after improving dealers service. A city-car should be introduced in a market where A-Segment cars count for 36% of total sales and is the world’s second largest by volume. Along with Maruti-Suzuki, Fiat is the world’s leader making city-cars. My friend suggests that Fiat should introduce the 500L and 500L Living as he thinks “they will sell as Indians love beautiful cars at a realistic price”. I must say that I disagree at this point. Indian consumers don’t appreciate the iconic cars or the heritage behind them. As it is a young market, people are more interested in affordable and easy-handling cars than stylish or fancy ones. This fact is expected to change in the coming years. Regarding the Punto and Linea, more powerful engines should be introduced. Fiat has recently launched an entry-level of the Linea with a very competitive price. This decision is focused on gaining market share in the bottom of B-Sedan, but can have a negative impact on the full-equipped and more expensive versions.

Following the comment of a reader, 75% of Indian diesel engines (Tata, Suzuki and Chevrolet) are produced by Fiat. This tells a lot of how efficient these engines are, and all what Fiat can do with them. ‘Krunal’ proposes 3 things to do: 1) a Panda for A-Segment (that could be easily a cheaper Uno) and a modified 7-seater Sedici (I don’t think Suzuki would allow a foreign brand to bring one of its products using another logo); 2) a Fiat Viaggio powered by 1.6 Multijet engine (C-Sedans aren’t popular at all in this market); 3) better gear-box for the Linea and Punto. These are all suggestions made by Indians who believe that the brand can have an important position in the market. Anyway, the recent sales results showed that better and coordinated work is a good start. The arrival of the Punto Abarth and Jeep range will be the second step.

Many thanks to my friend Bharath Elango for the help.

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9 responses to “Looking for solutions. The case of Fiat India

  1. I think a Indianized version of the 500L Living will be a very good car for the market. And yes definitely an Indian Uno as that is the biggest class. I would also say an Indianized version of the up-coming 500X will be good considering the success of the Renault Duster. Also they need to offer automatic or at the very least Duo-Logic gear boxes for the Indian made Fiat’s export markets.

  2. Felipe, any idea what happend in China this month ?
    Fiat sold almost 10,000 (!!) Viaggio. It’s incredibly good result.

  3. Maybe, the problem is the lack of agreements with Tata for the production of new models, and open its own factory, it would be very expensive in this particular time

  4. Before 1990, Fiat is a well established brand in India, and fiat UNO got huge numbers of booking. Due to delay supply and tough competition from Hundai Santro this car is loose the market share. How can get their old brand image is the biggest challenge for Fiat in India. If you are interested we can suggest you on this isssue.

  5. The issue has been that FIAT rushed into the market with the products, UNO lost our because if quality issues (car was produced in a factory owned jointly with the Premier – parners of FIAT in India in 1950’s with whom the most popular 1100 were made), The Palio also did well, just like the UNO, but a lack of second product meant dealers didn’t make money and also the service quality suffered. Linea and Punto lost out only because of the step-motherly treatment meted out to them by the TATA dealers – offcourse, the products could have been moderately tweaked to meet Indian tastes.

    But after all this, FIAT is making the right moves now. The business is only picking up because of the new and more committed dealers. This itself is a vindication of the fact that TATA dealers did not do justice to the FIAT brand (another matter that the biggest dealers are the TATA’s and their dealers whose sales are down 65-70%).

    For once, FIAT is putting in place the right infrastructure before launching new models – it makes sence not sell less cars than launch new cars and not sell well for every new car that fails in the market hurts the brand. One successful model will change the complete complexion of the market for FIAT and this will require a few launches, preferably simultaneosly or withing short gaps. My sence is that FIAT cannot hit the market with premium C or D segment right away. A new UNO, priced at a premium to Maruti with better features will be ideal. This can be followed with a new C segment car and a C+ like the Viaggio and the people carrier.

  6. I have owned almost every car sold FIAT in India – the 1100D, the Siena, the Palio, Palio Adventure and now the Linea – all cars except the Uno and the Grand Punto and I can say that the cars are perfect for Indian conditions – infact much better than Maruti cars, except for the interiors – which require improvement. In the general dusty environments of the Indian subcontinent, with 10 months of bright sunlight what is needed is that the cars should clean and bright interiors, uncluttered footwell and not too many corners where dust could accumulate – understand the new LINEA will have new interiors and gives me hope that FIAT understand this aspect better now.

  7. Yes, you’re right Mr, Yousuf, I have also Grand Punto the plastic parts of the interiors are not good quality. The Linea has no any like this problem.

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