One of the oldest foreign investors in India's auto industry, Italian major Fiat Spa is banking on its global success Grande Punto to revive consumer interest in its products in India. The compact hatchback Punto which is an unprecedented success in European markets is due to be launched in India next year along with a mid-sized sedan Linea which is based on the same Punto platform.
With the Tata-Fiat joint venture for the Ranjangaon facility and collective distribution of products already underway, Fiat is trying to address issues that have resulted in the relative failures of all its models in the past. "Our products like Uno, Sienna or Palio have always been appreciated. It is our service network and availability of spare parts that has let us down. Further, our cars were perceived to be fuel guzzlers and we have addressed these issues," said Giovanni De Filippis, managing director, Fiat India.
At a time when simultaneous launches of products in India and abroad are the order of the day, Fiat has deliberately put Punto on hold and the collaboration with Tata is aimed at providing the right launch pad for the model. The car was launched last year in Europe. "Punto is an important car for us and we believe it will be very popular with Indian consumers. There will not be any cannibalisation between Punto and Palio or between any of our products and Tata's as we will always be a premium brand even in the small car segment," Filippis said, adding that Punto despite being a compact car will give even low-end mid-sized cars a run for their money.
To say that Punto is the key to Fiat's future in the country would be an understatement. The car maker has been plagued by a variety of problems in the past including a sweet-sour relationship with erstwhile partners Premier Automobiles Limited (PAL).
Fiat's asscoiation with India dates back to 1959 when it entered into a licensing agreement with PAL could not capitalise on the opportunities after liberalisation of the sector in 1997. While new entrants like Hyundai, Honda, Toyota, GM and Ford marched ahead Fiat's fortunes nosedived. With its stables running dry, the last three years have been particularly harsh for Italian giant. Fiat notched up sales of just 1,245 units in 2005-06, a far cry from the 25,936 units it sold in 2002-03 - a fall of 95 per cent.
The silver lining comes in the form of its alliance with Tata motors. Though it is widely believed that the Indian car-maker gains more from the alliance, Fiat India is glad that there has been a minor recovery of sorts ever since the JV came into affect. With the same old product line, Fiat managed to post a 76.5 per cent growth in sales in 2006-07.
Its long-in-the-making Ranjangaon plant also opened up with an enhanced capacity of 100,000 cars and 200,000 engine transmissions and engines. However, with more and more global manufacturers like Renault, Nissan and Volkswagen eyeing the Indian market, the going cannot get tougher for Fiat. The success or failure for Punto - which remains Fiat's biggest global success in this century so far - will decide the firm's future in the country.