Good Idea
Could the Idea be the bright spark that will re-ignite Fiat's fortunes in India? We peer into our crystal ball.

Fiat has decided to revive its India operations and is examining various strategies to pull the ailing company back from the brink. For the past couple of years, Fiat India has lived in limbo, amid growing rumours that it would eventually be shut down as part of a global exercise to stem the flow of red ink on the Italian carmaker's balance sheets.
However, the double-digit growth of the Indian car market has prompted a change of heart at the top brass in Turin who have realised that it would be foolish to exit a market that is not only booming but ideally suited for Fiat's mass-appeal small cars.
Fiat's top boss, Sergio Marchionne, visited India in mid-April to evaluate several options that could put Fiat India back on track. This included a meeting with Ratan Tata at the Tata Motors plant in Pune to see if Fiat and Tata could cooperate in any way. Marchionne also met potential investors who would be willing to infuse cash into the cash-strapped company (see panel on page 38). A new managing director has been appointed at Fiat India and the news is that he has begun talking to dealers and vendors on critical issues.
The first step forward would be to write off the accumulated losses at Fiat India and begin afresh with new investment in Ranjangaon, Fiat's aborted greenfield facility outside Kurla. The Fiat management is quite clear that it would need to shift its operations from Kurla to Ranjangaon for its future models. However, this is easier said than done. Fiat's reputation is seriously tarnished and it would require a complete overhaul of the Fiat brand and model range to tempt back customers.
Demand for Fiat's lone model — the Palio and its derivatives — has evaporated and rejuvenating its once-popular ‘World Car’ and our 2002 ‘Car of the Year’ would be like flogging a dead horse. Since it was launched in late 2001, the Palio has remained unchanged and the styling changes carried out on the Brazilian model in late 2003 have not been effected here. The interiors too are unchanged and are in fact not one but two generations behind, dating back to the Siena's launch in 1998.
Plans to launch the upgraded Palio in India had been put on hold simply because Fiat didn't want to commit more money in a market that seemed like a bottomless pit with no return on investment. Also, the latest interiors in the Palio are only available in left-hand-drive models. To make a right-hand-drive dashboard for India, Fiat would have to invest in new and prohibitively expensive dies for injection moulding. The volumes in India don't justify the cost and hence this plan has been shelved.
The 178 platform on which the Palio is based is ageing and is nearing the end of its lifecycle. To try and revive this model, which also bears the burden of Fiat's tarnished reputation, isn't a farsighted approach. Instead, Fiat is studying a range of new models and assessing their feasibility for production in India. In late 2004, Fiat conducted a clinic of the Panda and Idea MPV as well as the face-lifted Palio.
The Panda with its compact dimensions seems an ideal choice for India, more so when you know that this little model epitomises Fiat's brilliance in small-car design. It was voted the European Car of the Year for 2004 and is the car the company has been relying on to pull it clear of its well-publicised financial difficulties, just as it did with the original Panda, the Uno and Punto in the past.
Shunning the temptation to make a cute-eyed retro car, Fiat has made the Panda a fusion of city car, SUV and MPV. Though it is tall, it's a notch smaller than the Getz and Swift and therein lies the problem.
Small dimensions mean small price, in the minds of Indian car buyers and the price of Rs 4 lakh, which customer clinics hinted at, looks impossible to meet. However, Fiat is looking at how feasible it is to use a modified Palio platform on which to produce the Panda. This would cut costs considerably if it could be suitably engineered.
While the interiors of the Panda are definitely small and cramped, they are superbly designed and finished. The dashboard is well laid out, built from good plastics and tightly screwed together. The design is again

very interesting and functional too and the dash-mounted gear lever is the first we've seen on a small car.
The Panda could be powered by a 1242cc engine that's not too dissimilar from the Uno's. This one produces a decent 66bhp and promises to be fuel efficient as well. But the engine that Fiat is hoping could change the fortunes for the company in India is its 1248cc Multi-jet diesel which Maruti will be producing under license from Fiat for the Swift in 2006. This means that Fiat can have it too and with Maruti having done all the hard work of localising it, this motor could be affordable as well.
It's the smallest common-rail turbo-diesel engine in the world and this compact, refined unit which develops nearly 70bhp offers fantastic economy and performance. In fact, the easy availability of this fantastic motor is a strong reason for Fiat not to give up on India.
Another model that clinicked favourably with Indian consumers was the Idea, Fiat's mini-MPV, which combines practicality with style and is affordable too. Just what Indians want. It is beautifully proportioned and packaged, thanks to design inputs from Giugiaro's ItalDesign and is substantially bigger than the Fusion.
Based largely on the existing Punto's platform, the Idea's wheelbase has been stretched to 2508mm. More significant is the 1660mm height, which not only creates generous headroom but also allows occupants to sit in a more upright position and adds to the interior’s versatility. Long-legged passengers will find the Idea more accommodating than most Rs 6-7 lakh cars, and it is also more generous when it comes to shoulder space.
To warrant the MPV tag, the Idea's rear seats slide to balance boot capacity and rear leg space. They also split, fold and tip, but cannot be removed. Although the rear lights are not mounted high on the rear pillars like in the Punto, Panda or even our own Indigo Marina, access to the boot is unhindered
The dashboard design is unusual with the instrument cluster placed in the centre, but the rest of the cabin is logically laid out and ergonomically sound. The tight turning circle means you can park in the tightest spots and you are helped by electric power steering that has decent feel and can be lightened at the touch of a ‘city’ button, just like in the Panda. Parking is made easier thanks to minimal overhangs front and rear and excellent all-round visibility.
Fiat would look at the two engine options, the obvious one being the 1.25-litre Multi-jet diesel and also a 1.4- or 1.6-litre petrol. The final go-ahead to make the Idea in India will be determined by the price. Fiat has to struggle against an expensive European cost base to which the Idea was designed and developed. However, the Idea will soon be launched in Brazil and it is this Latin American version, built for a more cost-conscious region, that we can expect. Fiat is targeting a price of under Rs 6 lakh for the Idea — that’s a tall order but one that has to be met if the Idea has to succeed.
Looking further into the future, Fiat is also considering the all-new Punto, based on the company's 199 platform, which will debut by the end of this year in Europe. This new platform would spawn several new models for a wide range of markets — including the replacement for the European Opel Corsa — and it is more than likely that some derivative would find its way to the sub-continent sometime.
But first things first. Fiat needs to get its house in order and put in place an effective marketing structure. If it all goes to plan, a new and rejuvenated Fiat will have its first range of models rolling out by the end of 2006 or early 2007 by which time the market will have matured to accept a new car more as a product than a brand.
No doubt, it will be a challenge for Fiat to bounce back in India and not many would bet on it. However, the Italian company has gone through worse times, like its very own survival, which is still at stake.

SWIM OR SINK
We examine various scenarios Fiat faces to survive in India.

• l The Hindujas are rumoured to be talking to the Agnellis to help revive Fiat India. Iveco, a Fiat Group company, has a 30 percent stake in Ashok Leyland, which manufactures commercial vehicles and is controlled by the Hindujas. It seems that Ashok Leyland will not invest in Fiat's Indian operations and at best will lend some managerial direction to Fiat India in areas relating to cost control, after-sales and infrastructure support. Though there have been talks of Fiat using Leyland's Hosur facility, it is not a viable/feasible option because it is a CV-manufacturing unit.

• l Fiat Auto's CEO, Sergio Marchionne also met Ratan Tata recently and this has sparked speculation of an alliance in the offing. Tata Motors will not be inclined to invest in a company whose losses are growing by the day. At best, the two could explore the prospects of a technical tie-up (for diesel engines, perhaps) or of Tata using some capacity in Fiat's Ranjangaon facility near Pune. Fiat could also tap Tata's enviable low-cost base for engineering its own models in the future.

• l Fiat is also open to the idea of hiving off some of its stake to a venture capitalist who would not only bring much-needed cash but also management skills. Media reports have indicated that ICICI Venture is in the running, but there has been no official confirmation yet. On this subject, the other interesting theory doing the rounds is that a top name from the auto sector is being considered for the “turnaround operation” where he will be singularly responsible for revamping the retail chain and after-sales efforts. Parent company Fiat will confine its participation to manufacturing cars and providing the technology.

• l The most logical solution for a revival is the parent infusing funds into the Indian operations but this is not going to happen, sources say. India was never a part of the list of countries that featured in Fiat's first restructuring plan that was announced nearly two years ago. The company has reiterated that it will focus on Brazil, Turkey and South Africa. The fact that India is a booming small car market could prompt Fiat to rethink its investment plans.

FIAT’S INDIA INNINGS
l Fiat entered into a technical tie-up with Premier Auto to produce the Uno in 1995.

l It took control of the Kurla operations in 1998 when the automotive division was spun off as a separate unit.

l Fiat India Auto Ltd (FIAL), the holding company, held 51 percent in the new entity, Ind Auto. This was subsequently renamed Fiat India Ltd (FIL).

l FIAL has since increased its stake to over 97 percent today with Premier holding the balance.

Panda	Punto