Three years ago, with signs of economic recovery in the air as a result of the government’s stimulus package, automakers Volkswagen, Ford, and Nissan went on a capacity expansion spree. Analysts now fear the companies will feel the pinch of overexpansion. Deep Mukherjee, director of India Ratings & Research, Mumbai, says, “The weakening of household budgets in the two years ending March 2012 points to muted demand in 2013.” Year-on-year sales of passenger vehicles fell in the post-Diwali months of 2012-13: December 2012 (-1%), January 2013 (-4%), and February 2013 (-17%). Against this backdrop, American automaker Chrysler has made a quiet entry—and has parent company Fiat to thank. Because of the Fiat acquisition, Chrysler has overnight gained access to a readymade factory and supplier base.
In 2006, Tata Motors and Fiat invested equally in a plant in Ranjangaon, Maharashtra, to make 130,000 cars. Although Fiat ended its commercial partnership with Tata Motors in April 2012, it can still use the factory to make 65,000 cars. Word is out that Fiat-Chrysler will bring the popular Jeep models, Wrangler and the Cherokee, to India this year. The two companies are also developing an affordable sedan and a compact utility vehicle, to be produced locally.
Nagesh Basavanahalli, managing director of Chrysler India Automotive, hadn’t imagined such an entry into India. Basavanahalli has seen it all at the Detroit-headquartered automaker for which he’s worked since he graduated in the early ’90s. He has been through Chrysler’s takeover in 1998 by the German automaker Daimler-Benz, which later sold it to a private equity firm in 2007. Two years later, Fiat bought Chrysler.
In 2007, Basavanahalli was mandated to set up technical centres in emerging markets such as China, India, and Eastern Europe. He opened an engineering design centre in Chennai to develop vehicles for emerging markets. In a couple of years, the Chennai team was designing Chrysler’s Dodge Dart as well as the Fiat Viaggio.
“Our teams complement each other,” says Basavanahalli, referring to Fiat’s strength in Europe and Latin America, and Chrysler’s market in the U.S. Fiat’s growth is based on premium cars while Chrysler’s forte is SUVs. In India, each company has a managing director, both of whom report to Chrysler’s Asia-Pacific chief, who in turn reports to global chief Sergio Marchionne.
Enrico Atanasio, Basavanahalli’s Fiat counterpart in India, is also bullish. “Fiat will bring the Abarth sports car here, to go with the entry-level sedan. A vehicle from [Chrysler’s] Jeep range will be made here. India can become a source of exports,” he says.
