Fiat-Tata venture eyes bigger volume play for turnaround

Tags: News

Firm expects to increase car capacity utilisation from 40% to 60%

Fiat India Automobiles, the loss-making equal joint venture between Tata Motors and Fiat group, is counting on the launch of the Jeep brand and refreshed versions of Fiat cars in India and sports utility vehicle from the Fiat stable to increase its capacity utilisation and come out of losses.

“We expect to increase our capacity utilisation for passenger cars from 40 per cent this year to around 60 per cent next year. For our powertrain facilities too, we expect to enhance our capacity utilisation from 60 per cent this year to 75 per cent in the next. This would firmly put us on the path to profitability,” said a top Fiat India Automobiles official.

The JV has already seen Tata Motors alone invest Rs 1,242.04 crore as of end March, the latest period for which information is available. In addition, the BSE-listed company had also extended Rs 265 crore unsecured loan to the JV. The JV saw its revenues from operations in 2011-2012 fall almost 15 per cent year-on-year to Rs 3,432.94 crore leading to an excess of expenditure over income of Rs 86.78 crore as per data gleaned from the Tata Motors annual report.

Mike Manley, chief operating officer — Asia Pacific at Fiat Chrysler, and member of the group executive council, feels that Fiat needs to get its act together in India which could by volume terms soon become the world’s fifth largest auto market. “There is disconnect between opportunity and our performance in India which is a very strategic market for the group,” he had said on a recent visit to Mumbai. Manley has laid a target for the new Fiat Group Automobiles India team led by Enrico Atanasio to increase its market share in India from less than 1 per cent to about five fold. Towards this end, Fiat will be introducing the Jeep brand and motor racing brand Abarth in the Indian market.

With a new set of dealers, Fiat’s own motor spare parts distribution operation and a revamped call centre, Fiat expects its sales top soar driving the capacity utilisation at its manufacturing JV. To achieve its sales targets in India, the global auto major is going to rely heavily on localisation of parts so as to achieve localisation content at launch for Fiat branded products of as high as 80 per cent. In this attempt it will be supported by the 1,000 strong research and development centre Chrysler India Automotive at Chennai.

“We are the third largest technical centre for the group worldwide after Detroit and Turin and we support all regions of the world with not just design and engineering solutions but sourcing as well. So we see no issues in developing a vendor base to support the launch of new products in India,” a top Chrysler India official told FC.

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