Fiat bets on SUVs and sporty cars in India

Fiat bets on SUVs and sporty cars in India

Go specialist and go alone. That's Fiat SpA's new mantra for India as the Italian carmaker tries, once again, to crack the world's seventh-largest car market.

Fiat, one of the first Western carmakers to enter India but now the worst performing, opens a new, fully-owned 57-dealer network on April 1, hoping to attract more of the 1.2 billion people in the world's second most populous country.

Rather than launch a new model in the cheap, small car segment that dominates India and is ruled by Hyundai and Maruti Suzuki, Fiat plans to tap into fast-growing areas like sports utility vehicles (SUVs) and sporty cars.

It will bring its Chrysler Jeep SUV to the country this year and build a small version of the car there by 2015, as well as take aim at the higher end of the market with Abarth, the sports version of its 500 and Punto models.

Analysts think it will be a challenge, but could work. "I think Fiat's focus is on launching a couple of niche products and rebuilding the customer experience," said Deepesh Rathore, Managing Director of IHS Automotive India. "It's painful but it's the time to tell the customer that Fiat is different from the image he or she has had in mind."

Fiat agreed in 2007 to build and sell cars with India's Tata Motors as foreign automakers began piling into the fast-growing market. But after three years of falling sales at dealers where Fiat's cars were displayed along the lower-priced Tata competitors, the Italian company decided in May 2012 to cut its distribution agreement with its Indian partner.

A reboot is certainly in order. While Fiat's 1.3 litre MultiJet diesel engine is under the hood of 75 percent of India's small cars, the automaker sold just 203 Fiat-branded autos in February, the worst of any major brand, and its market share has dwindled to a mere 0.3 percent this fiscal year.

"We all believe that we have scratched the bottom of the barrel," Enrico Atanasio, managing director of Fiat India told Reuters. "(Our performance) is not what the brand deserves."

Now is not a great time for a relaunch. Car sales in India are set to fall this financial year for the first time in a decade, hurt by high interest rates and slowing economic growth.
Yet the potential is there. LMC Automotive expects India's car market, currently around 2.6 million vehicles, to grow to about 6.9 million in 2017.

That's around half its forecast for western Europe, although well below its projections of 16.9 million for the United States and 31.5 million for China.