Fiat Chrysler Automobiles (FCA) has announced an investment of US$250m to increase sales volumes and enhance its portfolio in the lucrative SUV segment in India. It's a sign that the company sees India as a strategic growth pole.

The investment is in addition to the US$450m invested by the company in India over the past five years. The company intends to introduce next generation Jeep Compass, a three-row SUV, as well as locally assembled Jeep Wrangler and Jeep Cherokee. These vehicles will be manufactured in the Ranjangaon plant, co-owned by FCA and Tata Motors.

Animesh Kumar, consultant at GlobalData, says adding new vehicles and local manufacturing will enhance the Jeep brand, increase localisation, reduce costs and boost sales.

"The company tasted success with strong sales of Jeep Compass. However, it has so far failed to gain significant market share due to stiff competition and limited product offerings," Kumar says. "FCA presently has less than 1% share and has only two vehicles in Indian market - locally assembled Jeep Compass and the CBU imported Jeep Wrangler."

Kumar believes the SUV segment in India presents significant opportunities. "Several new players and models have entered the Indian market in recent times," he points out. "Players like Kia and MG Motor have entered the market and now the segment boasts of several models under sub-compact SUVs, compact SUVs and full-size SUVs.

"Though the Indian automotive market has been struggling, feature loaded SUVs have proved to be an exception. However, there is a higher demand for affordable SUVs like the compact and sub-compact SUVs."

See also: FCA spending $250m to launch four Jeeps in India