05.07.2004 As Fiat India launch the new Petra diesel, a significant restructuring and overhaul of Indian operations, that aims to turn the local market into a major regional hub, gets underway

Fiat PetraFiat India is currently undergoing a comprehensive restructuring exercise, with a new commitment which will seek to re-launch the auto brand in the country, and turn India into a future hub of worldwide operations.

The news comes as Fiat India yesterday launched a 63bhp 1.9-litre diesel version of the Project 178 'World Car' Siena saloon, which is known locally as the Petra, in order to cash in on rapidly growing local demand for diesel powered cars.

They are targeting initial sales in the region of 400-500 units per month for this new model which will go head-to-head with the Telco Indigo, Ford Ikon (Fiesta) and Maruti Esteem. The entry level version will be priced at Rs. 5,72 lakh, rising to Rs. 6,2 lakh for the higher-specification model.

Fiat first entered the Indian market in 1905, when the company was just six years old, appointing Bombay Motor Cars as its sales agent. Their involvement strengthened shortly after World War Two when they entered into a manufacturing agreement with Premier Automobiles Ltd (PAL) which initially saw the 1100 and 1100D, and then the Padmini, assembled locally.

In 1997 Fiat and PAL set up a separate entity, Fiat Automobiles India Private Ltd. The Italians took a 51% stake in the new company with the remainder being retained by PAL. Their first venture together was to bring production of the Project 178 'World Car to India, in its Palio and Siena guises, while the Uno was also added as a cost-effective entry-level model.

However recent sales have not lived up to expectations. The Palio, widely regarded as a higher-quality market-leading product, initial helped Fiat India's sales to rise to 40,000 cars during 2002, a figure that collapsed to just 15,000 last year. The higher-specification Palio 'Adventure' model, along with the Uno, were recently discontinued after a dismal run. With Fiat's eye firmly focused on turning around a recent sales slide in their core Italian market, the Indian operation was left to drift.

Fiat have now identified a failure to connect with the customer and they are plan a major dealer shake-up. While the new plans will add 10 dealerships to the 58 currently in operation, several existing ones will be lost during the overhaul. Fiat reckon that many of the big city outlets under perform ones located in smaller towns and rural districts, and will urgently seek to address this issue.

With this restructuring now in hand, Fiat India are starting afresh as their accumulated debts of Rs. 1,300 Crone are being written off by their parent. In the interim, they are aiming to sell around 15,000 cars this year, approximately the same as 2003, but boosted during the latter half of the year by the arrival of the Petra diesel which is expected to eventually account for around a quarter of sales.

A petrol version of the Siena saloon, known locally as the Petra EL, was launched at the end of April. At Rs. 4,75,250 it was the first 1.6-litre car in the highly competitive C-segment to be made available for under Rs. 5 lakh.

Built to withstand India's roads, the trim level is regarded locally as being in the quality bracket, while other important features include electric windows, power steering, central locking and air-con. Power is provided by Fiat's 'torquey' 1.6-litre DOHC petrol engine which puts out 100bhp at 5,500rpm.

However, although this car has strong niche appeal, it is not regarded as the optimum model for the fuel-efficiency seeking C-segment buyers, and the 1.9-litre diesel version introduced this week, which addresses this, is expected to contribute strongly to a successful segment penetration.

During the petrol powered Petra's launch at the end of April, Ananda Mohan Gupta, the Commercial Director for Fiat India, commented, “The Fiat Petra offered at the said price will make a significant impact in the Indian market. The launch also re-iterates our commitment to India where our focus has been to offer complete mobility solutions with a strong emphasis on ‘technology’ and ‘value for money’ to all our customers.

"The Fiat Petra will have all these attributes and for the first time, a 1.6 engine would be available at an attractive price of less than Rs. 5 lakhs, hereby reinforcing the ‘proud to own’ association with Fiat. With the diesel and another petrol variant to be launched shortly under the Petra label, these luxury sedans will offer the Indian automobile owner, the best of Italian engineering, technology, styling, safety, performance, comfort and sheer driving pleasure.”

Joining the Petra next year is likely to come the 'European Car of the Year' award-winning new Panda. Fiat have recently conducted customer surgeries in both Dehli and Mumbai, and have been highly encouraged by the response the Panda has received.

Local assembly would see the huge amount of spare capacity at both the ultra-modern, but unutilised, Ranjangaon facility, or the older, more established, Kurla plant, brought into use.

With domestic carmaker Maruti close to signing an agreement with Powertrain, the GM-Fiat joint venture, to produce the revolutionary new 1.3-litre 16v Multijet diesel locally under licence from 2006, a ready supply of these engines would be instantly available, if as expected, the go-ahead is given to assemble the Panda in India. Fiat would target sourcing around 70% of parts locally for this project.

Recently, in a strong boost to Fiat, India's leading motoring magazine, Autocar, pitched the Palio against its closest rivals, including Maruti's Wagen-R and Zen, the GM Corsa hatchback, and the Hyundai Santro Xing, eventually declaring the Fiat to be the winner.

Fiat Petra 1.6 EL (petrol): Full Details