3 min read.Updated: 14 May 2013, 12:04 AM ISTAmrit Raj
Move aimed at raising Fiat’s market share in Asia Pacific; firm looks to make 600,000 Chrysler units in India
New Delhi: Italian auto maker Fiat SpA is doing a feasibility study on the prospects of turning India into an export hub for its US unit Chrysler Group LLC as part of an Asia-Pacific expansion plan, according to two Fiat suppliers familiar with the development.
Senior officials of the group met component vendors in January to explore the possibility of setting up a manufacturing base. More such meetings with vendors are expected in June. The vendors have been told that Turin-based Fiat is looking to reinforce its manufacturing facilities for brands such as Chrysler, Jeep and Dodge.
“We are doing a lot of feasibility studies in India and this is one of them. There should be more clarity on this by next year," Atanasio said in an email. The “possibility of an export base is also there".
However, Atanasio, did not confirm if the export hub will only be for Chrysler brands.
Atanasio is being succeed by Nagesh A. Basavanhalli, who will oversee Fiat and Chrysler’s operations in India. Atanasio will move to another market of Fiat in the Asia-Pacific region.
Chrysler, one of the Big Three of the US auto industry, went through bankruptcy and later the US Treasury offered Fiat a 20% stake in the company. The American company has since repaid government loans; Fiat has raised its stake in Chrysler to 58%. The Wall Street Journal on 24 April reported that Fiat plans to buy out the remaining 42% stake that is now owned by the UAW Retiree Medical Benefits Trust. UAW stands for United Auto Workers.
The company is looking to make 600,000 units of Chrysler’s brands in India and 90% of the production will be exported, mostly to the Asia-Pacific region, according to a vendor who spoke on the condition of anonymity.
If the plan is approved, Chrysler will start exporting cars from India in 2015.
“They may be doing a feasibility study for the plant site and models but it is certain that they are coming here," said a second vendor, who is looking to supply airbags and seat belts to Chrysler. He expects orders worth ₹ 50 crore every month from the group if the plan is implemented.
Fiat is expected to come out with a request for vendors to submit price bids in the June meeting, he said.
“How much we sell in the first year of the new Fiat-Chrysler group will depend from customer acceptance to our products as we are designing new models to suit emerging markets like India. Based on that achievement of sales results could be quicker or slower, but we maintain ambitious plans for the Indian market," Atanasio said.
The move to set up an export hub in India signals Fiat’s renewed interest in the Indian market, where it has met with little success despite a long association. After having sold its popular models such as Uno and Fiat 1100 or Padmini through a licensing agreement with Premier Automobile Ltd, Fiat set up its Indian subsidiary in 1997. In 2006, it signed an agreement with Tata Motors Ltd to jointly manufacture and sell cars in India. However, last year, it decided to call off the alliance and embarked on a solo journey.
By making India an export base, Fiat will look at increasing its market share in the Asia Pacific region, Atanasio said. “You see, we have two-digit market share in North America, a long established market leadership in Latin America and close to 10% in Europe but in Asia Pacific, we have a very low share. We would obviously like to grow this share."
An export base in India would reduce costs for Chrysler, said an industry consultant.
“Indian auto sector is growing in a big way and you can see many car makers are trying to make India a hub for their different needs," said Pradeep Saxena, executive director, TNS Automotive India. “In this case, Fiat-Chrysler Alliance will get benefit on labour and raw material costs, besides support from their Chennai R&D centre."
Chrysler has a research and development centre in Chennai, the company’s third-largest after Detroit and Turin. The centre works on vehicle interiors, body and chassis, and engineering services for its global operations. It employs at least 1,200 engineers.
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