How GM, Honda, Fiat, Ford are trying to keep India ops on track

Some of the world's biggest carmakers are yet to get their India strategy right after more than a decade of trials and more than a few errors. That's reflected in the sea of red ink on the domestic books of the likes of General Motors, Ford, Honda and Fiat. Between fiscal 2008 and fiscal 2011?fiscal 2012 figures are yet to be filed?these four global auto giants racked up a collective loss of about Rs 2,700 crore on Rs 43,000 crore sales. Much of that red ink is justified as they were in investment mode, expanding capacities and setting up new plants.

Now, however, as the pressure increases on the emerging market arms to make more meaningful contributions, the Indian subsidiaries have begun to shift gears. Potentially game-changing models, opening up new segments and creating a complete portfolio, expanding capacities, cracking the pricing game, a sharper thrust on localisation to be more costeffective, and exporting more out of India are some of the strategies being explored. ET takes a look at how the two Detroit behemoths, Japan's second-largest carmaker and Italy's number one auto company are pulling out all stops to make their domestic operations pay back.

General Motors India

Lowell Paddock | CEO

Chevy, but no Cigar

Chevy did it for General Motors (GM). Almost. After starting out in India in the 1990s with the Opel brand, GM got some traction in the early-2000s, when it launched the Optra sedan under the Chevrolet umbrella brand. The multi-utility vehicle Tavera followed a year later, and between 2006 and 2007, the UVA hatch, the Aveo and SRV sub-compacts and the mini Spark.

By the end of the decade, when it launched its small car Beat, GM, with eight products at different price-points, had the widest portfolio among the multinationals.

By then the Detroit giant had invested over a billion dollars in India, and had two plants in Halol in Gujarat and Talegaon in Maharashtra with a capacity of over 200,000 cars.

The problem: Only about half of that capacity is being utilised. Which explains why GM India had a market share of 4.2% in 2011, with sales of 110,000 units.

If GM is struggling in India, it's because it has been bringing in products designed for overseas markets, says VG Ramakrishanan, senior director, Frost & Sullivan.

"They have to get back to basics and design products for the Indian market. While the Japanese stand for reliability, Germans for their engineering, some of the Indian brands for value for money, GM needs to have its brand attributes in place and focus on them."

Lowell Paddock, managing director of GM India since early 2012, agrees that "we will have to price our products competitively as Indian consumers have a low tolerance (to high prices), which also means we need to localise heavily." He adds that GM cannot survive on volumes alone. "GM wants double-digit market share and to increase its relevance in the market place. Ultimately, we want to get towards profitability."

A big step towards getting price-competitive will be launches from the stable of GM's partners SAIC and Wuling in the second half of the year. GM is expected to launch a multi-purpose vehicle, a hatchback and a sedan made by the Chinese producers under the Chevrolet brand. The challenge, however, will be to differentiate such models from the rest of those in the Indian market place, adds Ramakrishnan.

Fiat India

Enrico Atanasio Head ? Commercial

Third Run, With Chrysler

In its third avatar in India, Fiat's best hope of getting it right lies in the hands of the American company it acquired three years ago. With iconic brands like Jeep, Dodge and Plymouth under its umbrella, Chrysler could well be the muchneeded game-changer that Fiat CEO Sergio Marchionne needs in India.

SUVs and MPVs from the Chrysler portfolio are being considered for the Indian market, with Jeep the most likely to be introduced first.

Alongside, Fiat will also dig deep into its small-car portfolio to look for suitable models for India.

"We will develop a broad range of cars. We are investing in the right products and segments that could be developed for India," says Enrico Atanasio, a veteran sales & marketing honcho from Europe who was airdropped into the struggling Indian operation, which has been in the red for the four years between fiscal 2008 and 2011.

Fiat's problem is that it has had too many pit-stops in India, and failed to come out of a few.

Source: http://economictimes.feedsportal.com/fy/8av2Fvy0c0uek2mE/story01.htm

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