Candid Call: Fiat’s CEO Rajeev Kapoor admits that Fiat got things wrong in the past (Pic By Subhabrata Das)

Point out the state of affairs to Rajeev Kapoor, Fiat India’s CEO, and he nods in agreement. “We got things wrong (in the past),” he admits, assuring in the same breath that bad service would soon be a thing of the past. He says by 2009 end Fiat will have 100 service dealerships (all shared with Tata Motors) against the current 75, and will tie up with 150 suppliers. That will help Fiat procure 90 per cent of spare parts for all its cars locally, reducing servicing time and cost.

Kapoor’s rush to get things sorted is driven by hope; hope that Fiat still has a chance in India. Hope that took birth this January with the launch of Linea, a sedan that caught consumers’ fancy with its svelte looks, and its bargain starting price of Rs 6 lakh. Rival Honda’s City sedan starts at Rs 7.8 lakh. For a company used to selling 200-odd cars a month, Linea’s sales numbers appeared from another planet — 1,509; 1,262; 1,607; 1,101; 901 and 911 units from January to June. In fact, sales could have been better had the company anticipated consumer demand. “We had more of the basic models rolled out, but suddenly we realised that people wanted to buy the upper grade model,” says Kapoor.

However, Fiat has a long battle ahead to fructify the hope that Linea has delivered.

Troubled Past
For many people in India, Fiat is still synonymous with the black-and-yellow taxi, the Fiat 1100 model, licensed by Fiat Italy to the Doshis of Premier Automotive (PAL). For several decades, the Fiat and the Ambassador from Hindustan Motors ruled Indian roads. Even after Maruti came in with the Maruti 800 in 1984, Fiat’s great run continued, uptill 1996. Service was never a problem and spare parts were easily available. Then, in 1997, Fiat itself entered India with a joint venture (JV) with PAL. That lasted seven years, and saw the launch of a slew of cars such as Uno, Siena, Petra, Adventure, Palio and Weekender. Apart from Palio, none of the other cars lasted. In 2004, according to Kapoor, the Doshis, who had other financial interests, walked out of the JV.

In its third coming, Fiat was finally on its own in India, but things got worse. Service standards plummeted and sales went into a freefall. In 2002, Fiat sold 32,111 cars; in 2005, it sold 1,732. Partly to blame was the financial crisis at Fiat Italy, which was facing an internal cash crunch. And in July 2005, when its Kurla plant drowned in the Mumbai floods, the company’s fortunes appeared to have sunk for good.

The Fourth Coming
The first sign of hope came in 2008, when Fiat Italy and Tata Motors entered into a 50:50, Rs 4,000-crore JV. Along with it came Turin’s decision that the Indian operations would be completely run by local teams. Gradually, things began to get better. Sales grew 54 per cent in FY08, albeit the actual sales numbers were very small (3,347 units). Linea’s introduction in the last quarter of FY09 propelled the growth rate to 135 per cent. But for consumers, the partnership has proved irksome. Several buyers of Palio vouch for the fact that the service centres, which are basically Tata facilities, hand out second-grade treatment to Fiat car owners.

Industry sources say that since Fiat assembles Tata cars in its Ranjangaon facility, the agreement could also include sharing of technology, adding that the new Indigo Vista, to be launched by the year end, could use some of Fiat’s technology such as the popular ‘Blue & Me’ software and might be priced cheaper than the Linea. Analysts, however, add that such technology sharing is inevitable in a world where a few global conglomerates would rule the roost. “There will always be competition within strategic partnerships,” says Kapil Arora, partner, automotive practice in Ernst & Young.