* Fiat to open fully-owned dealer network on April 1
* Jeep and Abarth brands to enter India this year
* To manufacture mini Jeep SUV in India in 2015
* Targets 1 pct market share end-2013, 5 pct later
By Henry Foy and Jennifer Clark
MUMBAI/MILAN, March 27(Reuters) - Go specialist and go
alone. That's Fiat SpA's new mantra for India as the
Italian carmaker tries, once again, to crack the world's
seventh-largest car market.
Fiat, one of the first Western carmakers to enter India but
now the worst performing, opens a new, fully-owned 57-dealer
network on April 1, hoping to attract more of the 1.2 billion
people in the world's second most populous country.
Rather than launch a new model in the cheap, small car
segment that dominates India and is ruled by Hyundai
and Maruti Suzuki, Fiat plans to tap into fast-growing
areas like sports utility vehicles (SUVs) and sporty cars.
It will bring its Chrysler Jeep SUV to the country this year
and build a small version of the car there by 2015, as well as
take aim at the higher end of the market with Abarth, the sports
version of its 500 and Punto models.
Analysts think it will be a challenge, but could work.
"I think Fiat's focus is on launching a couple of niche
products and rebuilding the customer experience," said Deepesh
Rathore, Managing Director of IHS Automotive India. "It's
painful but it's the time to tell the customer that Fiat is
different from the image he or she has had in mind."
Fiat agreed in 2007 to build and sell cars with India's Tata
Motors as foreign automakers began piling into the
fast-growing market. But after three years of falling sales at
dealers where Fiat's cars were displayed along the lower-priced
Tata competitors, the Italian company decided in May 2012 to cut
its distribution agreement with its Indian partner.
A reboot is certainly in order. While Fiat's 1.3 litre
MultiJet diesel engine is under the hood of 75 percent of
India's small cars, the automaker sold just 203 Fiat-branded
autos in February, the worst of any major brand, and its market
share has dwindled to a mere 0.3 percent this fiscal year.
"We all believe that we have scratched the bottom of the
barrel," Enrico Atanasio, managing director of Fiat India told
Reuters. "(Our performance) is not what the brand deserves."
Now is not a great time for a relaunch. Car sales in India
are set to fall this financial year for the first time in a
decade, hurt by high interest rates and slowing economic growth.
Yet the potential is there. LMC Automotive expects India's
car market, currently around 2.6 million vehicles, to grow to
about 6.9 million in 2017. That's around half its forecast for
western Europe, although well below its projections of 16.9
million for the United States and 31.5 million for China.
"India is a small, low-margin market for Western auto makers
... there is no indication of a near-term earnings upside," said
Phillip Houchois, auto analyst at UBS.
"But if you think India will one day be like China, it's
nice to be able to put down roots there."
With enthusiastic new dealers, Atanasio believes Fiat can
end 2013 with 1 percent of the market and aim for 5 percent
longer term. It plans to exit the year with 112 dealers, versus
the 170 it had with Tata, and will continue to build engines and
cars locally with the Indian company.
MINI JEEP, LOCAL TWEAKS
A boxy Fiat sedan, built by Premier Automobiles from 1964 as
the Fiat 1100 Delight, is a familiar sight in Mumbai where many
still ply roads as Premier Padmini taxis. But more recently, its
Punto hatchback and Linea sedan have not caught on.
Fiat simply did not get the product offering right, Fiat
Chief Executive Sergio Marchionne admitted earlier this month.
Fixing it means introducing the Jeep Cherokee and Wrangler
models this year, to grab a piece of India's booming SUV market,
which LMC Automotive sees reaching more than 1 million by 2019
from just 363,000 last year.
Fiat also plans in 2015 to begin production in India of a
new mini-SUV Jeep currently under development, which will be
sold locally and also exported to other markets, Atanasio said.
Fiat took control of Chrysler in 2009, and has slowly been
adding the U.S. carmaker's brands to its stable worldwide. In
all, Fiat-Chrysler plans to launch nine new or refreshed models
in India in the coming years, Atanasio said. Recently, India was
the only place where Fiat was selling just one brand.
It will not, however, launch a new model in the low-priced
small car segment which accounts for around 70 percent of sales
in India as middle class families trade in their motorcycles for
four-wheeled status symbols.
Instead, it will modify the models it does sell in India to
suit local conditions, like the Linea sedan, built with a higher
ground clearance for India's pot-holed roads.
"Fiat will have to get its pricing and marketing strategy
right for this model (segment) if its wants to be successful in
India," said Ammar Master of LMC Automotive in Bangkok.