Another iconic brand is likely to exit India soon. According to a report in Autocar India, Fiat-Chrysler Automobiles (FCA), the parent company that owns the Fiat and Jeep brands in India, has given up hope on Fiat India. The company has had a poor showing in terms of sales numbers for a while.
For instance, in December 2018, Fiat India sold a total of 75 cars (Punto Evo, Avventura and Linea combined), while market-leader Maruti Suzuki sold 1,19,804 cars the same month, according to SIAM data.
If you look at the six-month sales numbers of Fiat India, it has been selling in single digits. The Fiat Linea sold a total of 72 cars in the past six months! The brand has not been able to bring in newer models, except for moderate facelifts of the Punto and Linea, and variants like the Avventura in the past 10 years. None of them have been sales success stories.
What Went Wrong?
Fiat in India has largely been relying on the sales of its engines to rake in revenues. Its sister arm Fiat India Automobiles Limited (FIAL) has been manufacturing diesel engines and selling them to other car companies. Its biggest client is Maruti Suzuki, which uses the Fiat-sourced 1.3 litre multijet diesel engine in a whole range of cars such as the Swift, Dzire, Baleno, Ciaz, Vitara Brezza, S-Cross and Ignis, accounting for over 50,000 units every month.
The other big client is Tata Motors that was using the same 1.3 litre engine in its Indica Vista and Zest series of cars. Other companies like General Motors and Premier also sourced the same engines from Fiat.
Now, both Tata Motors and Maruti Suzuki are moving to their own engines for their cars. Maruti will soon be launching a 1.5-litre diesel engine for use in its diesel range, while Tata has already developed its Revotorq (diesel) and Revotron (petrol) series of motors for its various cars.
The other big issue is emissions compliance. The 1.3-litre multijet diesel engine cannot be upgraded to BS-VI emission norms which kick in from April this year. It would simply be too expensive to do so. The Autocar report says it would cost Fiat about Rs 4,300 crores to bring in a new line of cars and new engine family. Given the number of cars the brand sells, that’s simply not a worthwhile investment.
What Happens Next?
A spokesperson from Fiat confirmed that Fiat will continue to sell model-year 2019 Punto and Linea cars for now. However, post April 2019, it will need to upgrade these models to meet the new crash-test norms and emissions norms. That may simply not be possible.
FCA will now rely solely on the Jeep brand in India. The Compass has been chalking up half-decent numbers. It has been managing to sell about 1,150 Jeep Compass SUVs each month over the past six months, which bodes well for the brand. There has been talk of the Jeep Renegade coming in to compete with the Hyundai Creta as well, but that’s unlikely to happen until 2021, when the new Jeep Renegade hits the global market.
Until then, FCA will have to pull out all the stops to ensure the Compass keeps the cash registers ticking. Yes, Jeep also sells the Grand Cherokee, Wrangler and SRT in India, but they are in very small numbers.
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