There is a company in India which is called FIAL and it stands for Fiat India Automobiles Limited. The location of this company’s plant is Ranjangaon near Pune in Maharashtra. Though the company is called Fiat India it is actually a joint venture with Tata Motors Ltd, India’s third biggest maker of cars. Automobile enthusiasts in general and Fiat fans in particular are acutely aware of the mess that Fiat is in India. Mess could be an understatement, it is more like a morass in which it is firmly, very firmly stuck and unable to extricate itself from.
Let us rewind a bit here to understand what could have gone wrong with Fiat in India, while elsewhere in the world the company is going great guns; so great that it has taken control of the smallest of the big three American car makers, Chrysler. Most know the story but to contextualize things let me refresh memories a bit. Just a few years ago, Fiat was in the red, globally. There was talk of the company selling of its other brands such as Ferrari and Maserati to keep afloat. Fiat then brought in Sergio Marcchione who did a Carlos Ghosn for Fiat. Fiat revived and strongly at that without having to sell its prized jewels. The turn around had to do with two cars the Linea and the Punto, also called the Grande Punto. The cars came to India too, they are still around but they failed to do to Fiat in India, what they did in other parts of the world. Initially the sales of the Linea were encouraging as were those of the Punto but slowly they began to decline to alarming levels and again it is only now that they are just about reaching some basic level of respectability. So what went wrong with Fiat in India? Good question which requires a long answer but can be summed up with one phrase Premier Automobiles Ltd.
In the days of the licence Raj when there were only three players making automobiles (two making cars and one making Jeeps) Premier Automobiles Ltd. or PAL was selling the antiquated Fiat 1100d (the d standing for delight) after having procured licence for manufacturing and selling it here For many years it sold as the Premier Padmini after having been called Premier President very briefly after it could shed the Fiat name tag. In the 1980s PAL also started making the 118NE which was essentially a Fiat 124 with a Nissan engine (NE) of 1180 cc.
In the mid 1990s when the Indian Government decided to open up the automobile sector various Indian companies went in for collaborations. PAL zeroed in on Peugeot of France to make the versatile Peugeot 309. PAL-Peugeot cars were made from the Kalyan factory of PAL and when the French were proving to be a bit of a nuisance, PAL renewed its links with FIAT for the making of the Uno from its old factory in Kurla. The nature of the agreement between PAL and Fiat was again a technology transfer agreement. PAL ran into labour troubles and Peugeot left the country in a hurry, but the the Fiat brand name was so strong that the Uno garnered 2.94 lakh bookings.
This was unprecedented even for Maruti and everyone waited with bated breath to see the Uno take over the Indian market. Unfortunately PAL got quagmired in labour troubles and could not deliver too many Uno cars and also could not return booking amounts to those who had booked the Uno. Thus started Fiat’s problems in India and as a brand it got tarnished since people that it was Fiat that was not delivering cars or refunding booking monies. Fiat bought out PAL, took over the Kurla facility and started honouring the bookings and delivering the Uno but already that was too late. People thought that things would change with the launch of the A178 platform cars and Fiat started off the three box Siena which looked solid but did not sell as much as Fiat wanted it to. Fiat made the mistake of not launching the Palio hatchback first and when it finally came, it looked very much like the Tata Indica, both cars having been designed by the Italian design house IDeA.
Apart from this the dealer network of Fiat was not interested in keeping customer’s happy and therefore, even Sachin Tendulkar could not sell Fiat cars as their brand ambassador. So finally Fiat and Tata joined forces by sharing dealerships which sold and serviced both Tata and Fiat cars. Here in lay another problem. Both car makers had very similar cars in the Indica and the Indigo and the Palio and the Petra (as the Siena later came to be called) and when Fiat brought in the Linea and the Punto on the opposite side of the showroom were the Vista and the Manza. Interestingly enough the Vista and the Punto shared engines from Fiat while the Linea shared its engines with the Manza. Now comes the clincher. The Tata cars were more spacious and cost significantly less than the Linea and the Punto, making the Fiat’s look like not value for money cars.
So without much ado let me get to the point. Sharing showroom floors by Tata and Fiat is never going to work for Fiat since they will look like unnecessarily expensive and impractical cars. It works for Tata but Tata cars have a reputation, that they are not well built and that their chassis and handling leave a lot wanting. Into the scenario let us bring in FIAL, the joint venture company. It already makes the Manza at Ranjangaon. Tata is always considered to be quality wise no match even for Maruti, which is really not saying much or saying a lot; that you choose, since Maruti is not known for great quality either.
So for both the companies to take the collaboration to the next level is probably the ideal solution. Which means they jointly develop cars and platforms, sell them as Tata-Fiat or Fiat-Tata depending upon whose ego is bigger and forge synergies wherein they can deploy different cars in different price bands without there being an overlap. Then the question of competitive selling between both the brands on the same floor space will also disappear. Tata will get the strength of quality and Fiat will get numbers. This kind of collaboration is also good for Jaguar/Land Rover and Chrysler. Even today J/LR gets engines from Ford and Chrysler cars have the handling characteristic of beached ships. Fiat makes very good engines and J/LR make pretty good chassis. Now if mutual strengths are swapped, then we are looking at synergies extending to the other brands as well. Needless to say those will not be jointly branded but they can take advantage of mutual strengths.
To me all this seems crystal clear. Then the question is why are Fiat and Tata not seeing it. I have an explanation which says that I am a megalomaniac who thinks he knows everything. Another explanation could be that both brands want to build on their own strengths and so do not want to club themselves with another name. That could be a valid reason, I don’t know, since I belong to the laity. But sometimes laity and commonsense can see things better because they are not clouded by positions or by marketing theories. Who was it that said “The sad thing about commonsense is that it is so uncommon”?