Sales by Italian car manufacturer Fiat’s Indian operation have been falling despite the competitive Palio range it offers.

Fiat’s failed attempt in India, in an otherwise growing market, comes at a time when the parent itself is crawling out of trouble.

In attempt to integrate the Indian operations into its global plan while improving its market share domestically, a high-level Fiat delegation led by CEO Herbert Demel will visit Mumbai next week to draw up a brand new strategy for the operations here.

Fiat India recently launched the Petra, basically a re-priced (read under-priced) 1.6 Siena petrol saloon. It expects to gain some share using the re-badging route in the highly competitive segment where the Tata Indigo, Hyundai Accent, Ford Ikon (a sedan based on the old shape European Fiesta) and (Suzuki-designed) Maruti Esteem have been leading the market.

The company has realised new launches are essential, despite accumulating losses, to ensure a turnaround. It plans to launch a stripped down version of the new European Panda early next year followed by the facelifted Palio recently introduced in Brazil.

Fiat is cutting costs globally and some of the help will come from sourcing price-competitive components from India. Exports will be stepped up and further synergies with Indian operations will be studied.

This initiative from the parent comes soon after the Bombay High Court allowed the company to write-off INR13 billion (€23.63 million) from an equity base of INR13.68 billion and an infusion of INR4.2 billion by its parent. The company aims at breaking even by 2005.

Deepesh Rathore / Tilak Swarup