Mumbai: Fiat SpA has had a rough run in India. It’s made two previous attempts to acquire a significant presence in the market that have proved unsuccessful, yet India, Asia’s third largest vehicles market, is hardly one the company can ignore. Fiat has been plagued by labour problems at its Kurla plant in suburban Mumbai as well as a poor track record in after-sales service.
This time around, however, Fiat is building a brand new plant in Ranjangoan near Pune together with Tata Motors Ltd, India’s largest truck maker. It is also lining up a range of exciting products that include the Grande Punto and Linea, both of which will be made locally, while importing the Bravo and the Cinquecento (or the Fiat 500), apart from introducing a diesel Palio next month.
What’s more, Tata is helping to sell Fiat cars at co-branded Tata-Fiat dealerships, and also providing after-sales service to customers. Presently, there are 65 such dealerships, and the plan is to expand this to 100 Tata-Fiat outlets by the end of the year.
Mint spoke with Rajeev Kapoor, CEO of Fiat Automobiles India Pvt. Ltd, on how he planned to convince customers to stay with a brand that may have lost ground in India. Edited excerpts:
Fiat’s failure in the past has been due to labour problems and its ineffective marketing and after-sales service. How are you going to address these issues this time around?
I don’t think we are going to have any labour problems anymore. We are putting up a world-class facility and this becomes an integral part of it (satisfying workers). They (workers) are our partners. As far as marketing and after-sales support is concerned, which was a weakness, this has been completely overcome by joining hands with Tata.
Positive outlook: Rajeev Kapoor, CEO, Fiat Automobiles India Pvt. Ltd. (Photo: Abhijit Bhatlekar/ Mint)
Tata is a very respectable brand with a pan-India dealer network. There are select co-branded dealers who are distributing and servicing our cars.
The market perception on the quality of Tata cars is not so great. So why has Fiat chosen the company as a partner?
The market perception of Tata cars will also change slowly. But we are not talking about the cars’ quality. We are talking about the service quality. As far as the service quality is concerned, nobody has a complaint against Tata. The current Indica platform may have some problems, but they are overcoming them with the new Indica launch.
Do you think customers are going to be convinced enough of the quality of your after-sales service to go out and buy Fiat cars?
Looking at the Palio (sales) numbers, they indicate that customers are regaining faith in the brand. The numbers are slowly going up. (Fiat sells around 300 Palios a month). With the diesel launch, we expect those numbers to further go up. The very nature of the Tata collaboration in this regard is that we have Tata as a support service which has built a lot of confidence. To change the image, all the co-branded outlets will have an absolutely different identity by the end of this year. They would be very Fiat-styled outlets. The way we help customers will be as per the Fiat standard. They will have different colours and schemes, and staff that is trained, and the way they are friendly to customers.
Don’t you think that once the Nano, or Tata’s Rs1 lakh car, is launched, Tata dealers will be under pressure to sell this model rather than any of Fiat’s cars?
No. Within the Tata organization, they have a very dedicated group of people to look after the Fiat brand. It’s not only a distribution agreement, but they have also invested into the company. Their interest is to sell the numbers (of Fiat cars).
Many companies are setting up their research and design (R&D) centres in India. Is that also part of Fiat’s plans?
Yes, we are setting up an R&D centre here (in Ranjangaon). It will start small in the sense that it will start with tooling and then reach to a stage where we should be able to design our own components. At the moment, we are spending about Rs70 crore (on this). Going forward, we would be spending anything between 2% and 2 .5% of our turnover (revenues) on R&D.