Fiat India is to rationalise its operations and switch towards a premium brand strategy as it bids to rebuild its position in India, MD Paolo Castagna has confirmed. On the occasion of the launch of the new Palio Adventure Sport, the newly-appointed Managing Director answered questions regarding the future of Fiat in India, at a press conference.

"We understand the issues Fiat has faced in the Indian market. Our focus is clear and we are here to stay," confirmed Dr Castagna who said that the areas of cost reduction, customer service, brand image and positioning, and the dealer network, all needed urgent attention. "We have recognised the various roadblocks and understand the need to create the required customer confidence, making Fiat the most preferred choice. We need to streamline our operations and target our brand strategy at the premium end, being in sync with changes in the Indian economy where customers have high purchasing power and aspire to be different," he added.

Dr Castagna wants to swiftly improve the patchy dealer network and aftersales service, bringing them up to international standards. The Adventure Sport will be a part of the firm's strategy of now focusing on the premium end of the rapidly-expanding domestic car market. ''We will now revamp out after-sale service and dealer network in India up to Fiat's international standards,'' he reiterated, ''We are now planning to organise an orientation programme for our dealers. Even after that, if the dealers can not perform up to the mark, we will think of curtailing the number of dealers.''

Dr Castagna sees two options for growth. Either importing a wide mix of Fiat high-volume models, which he admitted would need high sales volumes to justify the large investment that would be required, or else they could concentrate on small volumes of higher-end models, such as the Fiat Idea and the new Croma. However this strategy would require the prior overhauling of the dealer and after sales networks if it was to have a chance to succeed. Fiat India plan to start the ball rolling by importing the Panda and Idea models, after getting highly positive reactions from recent customer and dealer clinics across India. However Dr Castagna said it would be 'some time' before the two models were introduced, explaining that “the task at hand is to ensure a product with the required technical specifications, including the right amount of localisation, with the ideal costing and perfect pricing structure.”
 

With Fiat having excess production capacity at its Kurla manufacturing plant, which can produce 60,000 vehicles per year, but is in fact only currently turning out 200-300 Palio and Petra models each month, and a second manufacturing plant at Ranjangaon near Pune, which has a capacity of 70,000 units but is presently idle, consideration is being given to building the Panda locally. This would eliminate local import duties, as well as allowing India to become a regional distribution hub to countries such as Indonesia, Sri Lanka and Bangladesh.

Dr Castagna confirmed that Fiat India Ltd was now virtually debt-free after Italy wrote of Rs1,300 crore last year. With bank debt now standing at just Rs29 crore, further cash injections by Fiat Auto were not considered necessary in the short-term added Dr Castagna. After the last round of debt write-downs and capital infusions, Fiat's Indian joint venture partner, Premier, is virtually out of the picture with its stake reduced to just 0.25 pct.

Asked about persistent media reports that a new joint venture agreement with the Hindujas and the giant Tata Group was imminent, Dr Castagna said "The question is correct, but you are asking the wrong person," stating this was a decision for the Fiat Group.

FIAT INDIA LAUNCH THE FIAT ADVENTURE SPORT

On Friday Fiat India launched the new Fiat Palio Adventure Sport, which targets younger and image conscious consumers who are looking to harness the latest styles and fashion with enhanced levels of safety and performance. The Adventure Sport, which will be available through the nationwide 60-outlet dealer network, comes with a 1.6-litre engine, in a choice of four colours - Formula Red, Thunder Black, Silver Frost and Glacier White - and a 'driveaway' price of Rs 5.58 crore.

Fiat India's newly-appointed Managing Director Paolo Castagna announced the Adventure Sport at a press conference on Friday morning. The Adventure Sport will be built alongside the Palio and Petra models at the Kurla production facility.

by Edd Ellison