India is a key market for any car maker and FCA has problems there. The group is represented by only one brand, Fiat, and it hasn’t been able to occupy an important position in the 2,6 million units Indian car market. It is a difficult market not from the point of view of the competition (there are few brands to choose) but from the clients and legislation perspective. Sales struggle to grow following macroeconomic problems, tax policies and a massive part of the population still making part of the poverty mass. In this context, Fiat proved it hasn’t been able to meet the existing and difficult demand despite its continuous announcements, range repositioning and ambitious targets.
In 2014 Fiat sold 12.400 units or 41% more than the previous year. The big jump allowed Fiat to be the second fastest growing brand, right after Honda (+67%) and ahead of Nissan and Suzuki-Maruti. Thanks to the updated Linea and Punto, Fiat posted the best volume since 2011, but it was also the result of the company’s decision of selling its products directly and not through Tata’s dealerships. Currently Fiat India offers 131 points of sales and 125 service oulets across the country, which is certainly an important increase when compared to the 100 dealerships it had by the end of 2013. Meanwhile overall market posted a 3% volume increase to 2,5 million units, its second best result in history. There were only 5 car brands to outperform the total market’s growth: Honda, Fiat, Nissan, Suzuki and Hyundai. Nissan budget’s Datsun arrived, and Tata, Mahindra, VW, Skoda, Renault and Chevrolet posted double-digit drops. Based on those facts, anyone could conclude that Fiat isn’t really struggling in Indian market. The truth is that the group has two big problems: its lack of fresh products and its short and mid-term targets.
In May 2014 at the Investor Day presentation, the company indicated that it intends to sell 130.000 units by 2018 thanks to Fiat and Jeep brands, which is supposed to be introduced this year. By that year the group aims to produce 6 models, import other 2, and selling all of them in 220 dealers. FCA targets are based on IHS projections for overall market of 5,1 million units in 2018, including LCVs. During that presentation the company also showed its 2014 FY target: 25.000 units. As stated before Fiat total sales were below that objective and the brand could only achieve half of it. The main problem is the reduced range despite the launch of other versions such as the Avventura (the cross-over look of the Punto), a revamped Punto and the upgraded Linea. At the end all of them are mere updates which feature better trims and in some cases better engines. But the market expects more: more products and all-new cars, and that’s what the competitors are doing.
The alliance is a good example of how a good range and continuous launches can have a positive effect on sales. Despite last year’s tiny sales fall (-2%), the group continues to reveal new products and even new brands, like Datsun, launched in early 2014. Following the market’s trend, most of the group sales relies on 2 small SUVs, the Renault Duster and the new Nissan Terrano. Even if it seems that there’s cannibalization between them, these SUVs counted for 64% of the group’s sales and were among the top-15 best-selling SUVs in the country. Besides Renault-Nissan keeps working on new launches. Some weeks ago it presented the Renault Lodgy for the important MPV segment and it announced it is ready to launch a new city-car to compete with the popular Maruti Alto (India’s best-selling car) and Hyundai Eon. The car is expected to use both design languages, the Renault’s and Datsun’s.
The Japanese car maker delivered 180.000 units in 2014, up a massive 67%. In 2011 they sold 48.000 cars. The product strategy is based on developing a family of cars specially designed to meet Indian taste and needs, and becoming a referent in the C-segment with the modern Honda City sedan. Contrary to Renault and Nissan, Honda’s growth isn’t based on a particular SUV (the HR-V is expected to hit Indian dealers shortly). They just focus on giving Indian consumer what he’s looking for: modern cars that meet local tastes.