Mumbai: Rajeev Kapoor was interviewed by Fiat Group Automobiles S.p.A. chief executive officer (CEO) Sergio Marchionne in Turin, the auto maker’s Italian headquarters, in 2007 before being hired to head its Indian business. “We need to re-establish Fiat in India,” Kapoor recalls Marchionne telling him.
Aiming growth: The Fiat assembly line in Ranjangaon, Maharashtra. Fiat India has sold at least 10,000 Lineas since January, and 6,000 Grande Puntos since the model was introduced in June. The company aims to sell 6,000 cars per month and turn in a profit by 2011. Hemant Patil / Mint
Kapoor, former general manager and plant head at Hero Honda Motors Ltd, India’s largest motorbike maker, was given a free hand by Marchionne in revving up the Fiat brand in India.
“He expected in return a high level of performance in terms of quality and speed,” says Kapoor, CEO of Fiat India Automobiles Ltd, a 50:50 joint venture between Fiat and Tata Motors Ltd.
Implementing the brief wasn’t going to be easy. Marchionne was effectively handing Kapoor in India the equivalent of the job he himself had performed at a global level by restoring Fiat’s ailing automobile division back to the black in 2006, two years after taking over as CEO of a company that had piled up almost $12 billion (Rs55,560 crore) of losses over a four-year period.
Also See Growing Numbers (Graphics)
Fiat India hasn’t quite turned around as spectacularly and continues to lag behind rivals, but a quintupling of sales in the seven months to October on the back of two new launches—the Linea sedan and the Grande Punto hatchback—suggests that the firm is doing something right as it aims for a cash profit by 2011.
Fiat’s resurrection reflects the change the parent firm has under gone under Marchionne, who has infused a new dynamism in the firm. Fiat’s market capitalization, which has soared to €13 billion (Rs90,220 crore) from €5.7 billion in 2004, is a testament to that change.
“Between 2004 and today, Fiat has been through a major transformation internally,” says Silverio Bonfiglioli, chief operating officer at Fiat Group Automobile.
Going astray
Twice before, Fiat faltered in the Indian market, where it failed to capitalize on its first-mover advantage. A technical collaboration and then a joint venture with Premier Automobiles Ltd, in the 1990s, went astray. Newer models from the assembly lines of Maruti Suzuki India Ltd, Hyundai Motor India Ltd and Ford India Ltd quickly overtook Fiat products such as the Palio hatchback and the Siena sedan.
What had gone wrong?
It was an example of European manufacturers failing to read the Indian consumer’s mindset and taking the market for granted, says a partner at a global consulting firm who declined to be named.
The troubles at Fiat’s parent firm didn’t help, clouding the future of the auto maker and its affiliates. That was until Marchionne took over as the fifth CEO of the auto maker in two years, and began the turnaround job.