1. Introducing the smashing new Team FIAT T-Shirt !! To order yours click here : Team FIAT T-Shirt

Avventura Exports

Discussion in 'Fiat India News' started by Vidhyashankar Kannan, Mar 6, 2015.

  1. Vidhyashankar Kannan

    Vidhyashankar Kannan Regolare

    Messages:
    271
    Hyderabad
    Hyderabad
    Avventura 1.3 90 HP
    Would anyone know if the Avventura is being exported from India? It was to be a global launch but I don't see it anywhere else other than India.

    Besides, the low sales figures of Fiat cars inspite of being profitable has me wondering if they are shoring up their profits through exports as well. They do have a large manufacturing capacity. Anyone?
  2. prabhjot

    prabhjot Esperto

    Messages:
    2,455
    delhi ncr
    Europe is the only other big diesel market. Obviously, there'd be no demand whatsoever from there for the Indian-made Avventura, certainly not in the right-hand drive UK and Ireland, where the 500 series of models are doing terrifically. Obviously Brazil is out too, as are most of the Asian right-hand drive markets, including Japan and Korea? and esp the CUV/SUV-loving Australia, at least until the t-jet arrives on it?

    The Ranjangaon plant gains its remarkable profits, despite considerable slack capacity, from 'in-sourcing' of component manufacture, and not just from sharing engines with Tata and Maruti, apparently. It's likely that many such components including engines? and transmissions are indeed exported directly rather than in fully assembled Punto-s, Linea-s and Avventura-s. And that I guess is how Fiat is able to offer such build and component quality at the sorts of well-below-the-Jap/Korean-competition that they do, to little or no avail of course.

    I suppose once the Avventura t-jet arrives we'll see some exports by FCA India to the usual 'commonwealth' right-hand drive markets esp Sri Lanka, Australia and S Africa.

    A major reason, as far as I can figure out, for Fiat's re-orientation towards heavily localized production or 'industrialization' (as FCA calls it), and not just passive ckd assembly, of some smaller, newer Jeeps rather than Fiats over the next 2-3 years (IF that's what'll happen, it sort-of says so clearly in the India section of the recent global 5-year plan) is that export possibilities are very extensive to AT LEAST all right-hand-drive markets, which is definitely not so for current or future? Indian-made Fiat models, given the geographical and model character of demand for the Fiat brand.

    I hope the possibility of engine(components) and transmission exports out of Ranjangaon will enable the introduction of the 1.5/1.6 mjd, (even) if Maruti and/or Tata (don't) need/request for it??

    Many Indian/Ranjangaon-made components are used on Fiats abroad, and of course vice versa, apparently: 'global supply chain'.
    Rohan and Vidhyashankar Kannan like this.
  3. Vidhyashankar Kannan

    Vidhyashankar Kannan Regolare

    Messages:
    271
    Hyderabad
    Hyderabad
    Avventura 1.3 90 HP
    Thank you @prabhjot . From your post, I understand that exports happen for various components and not just cars. This could also that the businesses are not to be combined. Fiat car sales in India will not be supported by the export business. They would be mutually exclusive unless FCA includes exports and local sales in the same book of accounts. My guess is that the India car retail sales is a different unit that needs to generate its own profits.

    Even the introduction of the 1.5/1.6 MJD engines for outsourcing to Maruti would still not financially support the Fiat car sales in India. The basic premise is that Fiat India needs to survive to be able to sell cars locally. So if the factory is being used to reasonable capacity, then it remains profitable as the output value is far greater than raw material value. But I guess it still will not translate to the need to sell cars in India.

    By now, it is clear that the Indian car buyer is not even bothered to look at Fiat as a shortlist. Barring the tiny numbers like us, the rest of India finds no value in the brand. They are perfectly content to have a Fiat engine in their cars but nothing else from the brand. It is a peculiar scenario. It is like the Intel desktops being termed junk but the processor itself being very valuable. From a business point of view, I can imagine only the below scenarios:

    1. If sales fall further, the dealers are going to shut down on their own. Even if Fiat offers them credit of maybe 3 months, it is not going to improve things as the customer is totally rejecting the brand for some reason inspite of finding the cars attractive and reasonable VFM. The status factor is simply zero. I'm sure that if Hyundai ever acquires Fiat, they will release the same Punto Evo rechristened as Hyundai Pani Puri and it will sell in buckets for its outstanding quality similar to that of BMW.

    2. Fiat may want to continue just to keep the basic brand recall alive in the country. India is a weird yet large customer base. It may have to spend money to ensure that generations know that there is a brand called Fiat. But the dealerships will have to reduce and remain restricted to large or rich cities. If you currently see the dealer network, Haryana, Punjab, Kerala and Tamil Nadu have the maximum dealers. Andhra Pradesh inspite of being a large state has only 3 dealers, all in Hyderabad. A new dealer has opened in Karimnagar and 1 in Vishakapatnam. The highest selling hatch here is the i20, no questions asked. Hyundai has become such a brand that people just go and buy it sometimes even without a TD. Let's accept that Fiat stands little chance in India to be a major seller. As I do not know what their breakeven targets are, I cannot comment.

    3. Move into the premium segment where the real profits are. Selling mass cars relies on volumes and wafer thin margins. Maruti makes is money starting by using less steel in its cars. Steel is the major input cost. Less steel, more plastic and basic wiring components with one Fiat engine. And viola! You have a very cheap car that defies the laws of depreciation in the minds of the Indian customer. Neither Fiat nor any of the other brands can beat this. If they get even one successful product like a Duster or an Ecosport, they can claw their way back. Isn't it odd that many customers suddenly find Fiat cars worth buying when they announce their massive discounts? For example, in July 2014, I was offered the outgoing Grande Punto 90HP for just 7.5 lakhs on road. The same Punto Evo 90 HP is 8.5 lakhs onroad. The perception is that even by selling at 7.5 lakhs, Fiat is able to make a profit. So why pay a lakh more? The impression is that "Fiat is pricing their cars too high", input cost of steel be damned.

    4. Merge with existing third party service centres to reduce cost and remove most dealerships. Keep exports active and sell to an Indian customer only or order. Keep only 1 sales outlet in around 10 major cities directly run by Fiat. This will remove the overhead component, eliminate dealer tirades and ensure proper control. The irony is that even with their service being one of the best in India, the perception is so poor. People just don't know about their service levels.
    prabhjot likes this.
  4. nbvcrao

    nbvcrao Amatore

    Messages:
    235
    Guntur
    @Vidhyashankar Kannan

    small correction....Fiat India had dealerships in Hyderabad only when AP was united. After the bifurcation of the state, only 1 Dealership opened in Vijayawada by name, Turbo Automotives P Ltd., dealers for Vijayawada and Guntur. @harsha sunkavalli is the MD and a member on the forum. Vizag and Kakinada are Fiat Authorized Service Stations. Popular Auto Service, Kakinada, is selling good number of Fiat cars by getting them from Turbo Motors or AV Motors Hyderabad.
    prabhjot likes this.
  5. Vidhyashankar Kannan

    Vidhyashankar Kannan Regolare

    Messages:
    271
    Hyderabad
    Hyderabad
    Avventura 1.3 90 HP
    @nbvcrao
    Thank you. Appreciate the eye for detail and feedback. It still proves that there are too few dealerships for the two states combined. More sales are required to stay profitable. Vijayawada is a city where people lay low profile but have huge amounts of money. Same for Guntur. And only 1 dealership for the two rich farmer cities.

    I had the fortune of driving from Delhi to Chandigarh. On the way, I saw and understood why some of the most expensive cars and superbikes belonged to the two states of Haryana and Punjab. The farmers in these two states are really well off and they splurge. I saw many a GP with alloy wheels and minor modifications done. Heck, I even saw M800s and Wagon Rs with thick alloy wheels :D

    So it is no surprise that Fiat has many outlets in these states. But then so do Bentleys and Jaguars.
  6. prabhjot

    prabhjot Esperto

    Messages:
    2,455
    delhi ncr
    @Vidhyashankar Kannan

    Tough to disagree with your analysis.

    IF they decide to (a) reduce the number of dealerships/focus on say the top 12-15 cities (b) out-source to third party service providers like Mahindra First Choice or, who knows, get back together for sales and service with Tata which by now has revamped and improved its own dealerships and ASS centres...

    IN ORDER TO keep the brand recall alive until they are able to launch products that are outside of the mass market (say, the 500X at 15 lakhs, or the Abarth-s, etc) and/or until the Jeep launch and roll-out is complete (say by 2017)....

    they'll be right, because they'll be recognizing the uniquely peculiar nature of the Fiat brand. The brand in India is at one and the same time sort-of charismatic/prestigious among those few who know and care AND void of much 'value' to the rest, the vast majority.

    Such a brand life can ONLY be sustained via a premium/cater-to-enthusiast/cater-to-the-knowing approach.

    In which case, the dealerships have to be drastically reduced and the remaining bigger-city ones invested in, AND the product specs (eg, t-jets with dual clutch gearboxes etc) have to ramped up in the short term even if the price becomes as high as the segment bestsellers, WHILE preparations and decisions are made on which 'premium' products to bring here at what price points, with what degree of localized manufacture.

    Cut costs in the smaller cities by shutting down dealers but NOT ASS support, and yet invest in the new kind of brand-positioning/advertizing required for the bigger-city, 'hipper' crowd. e.g., the brilliant 'car-o-bar' Fiat themed bar/lounge/restaurant with live events just launched in Bangalore.

    They could also, for eg, piggy-back the future 'premium' models on the Jeep brand and its all-new dealerships? Sell Abarths and the entire 500 sub-brand line-up alongside jeeps, for eg. Since, in any case, the plan globally outside the US is to eventually sell the new Alfa Romeo-s via Jeep dealerships?
    Vidhyashankar Kannan likes this.
  7. teja

    teja Timido

    Messages:
    8
    bombay
    bombay
    Grande Punto 1.3
    Sourcing ASS to 3rd Party - should never happen

    are we forgetting that one reason people are apprehensive about buying fiat cars is due to the horrible ASS stories they heard, especially when it was with TATA's. if at all they now outsource ASS to some third party again, will they be able to stop the step-motherly treatment (no offence to step moms) which in the first place tarnished their brand image. read stories when the car was lying in the garage for weeks due to unavailability of parts. that said, outsourcing helps when there is no dealer/ASS penetration like in NE states.

    So, fiat if it learnt from past mistakes should never think to outsource ASS entirely, until dealers stop closing down
  8. Vidhyashankar Kannan

    Vidhyashankar Kannan Regolare

    Messages:
    271
    Hyderabad
    Hyderabad
    Avventura 1.3 90 HP
    yes, reduce dealerships and bring it into the company fold. Or have really aggressive dealers who are capable of selling well. The issue even now is that some of the dealers behave as if they have taken the Fiat dealership only out of no choice. Third party service can certainly be done or even have 1-2 exclusive Fiat service centres. Let's be honest. There are not that many Fiats in India to queue up outside the service centres everyday. Besides, the cars mostly only have niggles and not total fails. But Tata? Maybe not, as they are in competitive mode too and the Punto directly competes with the Bolt. Unless there is a segment differentiation, Tata will not be interested in displaying Fiat cars. The Linea and Avventura are exclusive to Fiat. Besides, Fiat have learnt that inspite of selling fewer cars after the split with Tata, they have turned out higher profits as the royalties to Tata have reduced.

    This is where it gets interesting. There are very few people who would buy the 500. Reason being that on a Purchasing Power Parity, the 500 is too expensive in India to justify a purchase. it is a 2 seater mostly and does not address the purpose of a car i.e. to transport 4 people with luggage. And with the excise and duties on it as a luxury model, the pricing goes up even more. Only the rich kids and yuppies with huge disposable income may think of one. Once a child comes along, it immediately makes no sense to own.

    The Abarth, definitely, same for the Jeep. Distinct and addressing a certain segment. The trouble is, Fiat is associated with the Premier Padmini so much that it is not seen as a luxury brand. Precisely what happened to Tata. They tried addressing all segments and failed in all. The Nano would not sell as people did not want to be branded as poor. And the rich would not buy the Aria as they did not want to be associated with the brand that makes cars for the poor. Its all about perception. And middle class don't want cars that are taxis. Tata learnt the very hard way that a brand is everything. They researched and invested logically instead of approaching it from a brand building point of view. So if Fiat is bringing in the Jeep, they may have to open Chrysler outlets and display them there. Tata does not display a Nano in the JLR outlet. Duh. Somewhere along these lines, Fiat will have to take extreme positions to succeed. The middle path never worked. Even Maruti is realizing that now. They are setting up premium outlets for their more expensive models. Customers who want a YBA or a Vitara do not want to go to a place where they rub shoulders with customers buying an Alto.

    You're bang on when you say that they need to sustain the brand by going premium. But if they do it with the classic Italian indifference, they are screwed.

    Totally right. The dealerships should be more hep, more knowledgeable. Pay the staff a little more so that better talent is attracted. Reducing dealerships will give them more control on salaries. I know I sound harsh but those staff will anyway get hired by the newly expanding Maruti and Hyundai outlets. There's room for all. And then be sure to not waste time in bringing out a new product, even if it is only one product. Premium products should not change often otherwise they lose value.

    Service centres are very very important to the customer. Just knowing that a service centre is within reach is all it takes to keep people with the brand. I admit, even I was convinced on the Avvy only after knowing that the service is indeed good. The diversification into the bar/lounge themed outlets need to be handled with care. It should be used more to market the product in subtle ways. The food and ambience is just bait.
    prabhjot likes this.
  9. teja

    teja Timido

    Messages:
    8
    bombay
    bombay
    Grande Punto 1.3
    what i'm saying might be OT to the title..but it looks like most of other topics, the discussion will turn out on what FIAT should do, what's working and not working for FIAT!

    building anything from scratch takes time, and needs patience. fiat's case is slightly worse, since it carries -ve brand value, and might take more time and effort to build back it's image. so if fiat wants to do good in india, i believe they do understand it. every decision is a litmus test.

    some mistakes they did with the latest 2 product lauches - Evo & Avventura
    • production/supply chain issues - look at stories from @@Vidhyashankar Kannan,@@Tornado, @@Sunil216,@@joeswatmail (kudos to their patience)
    • no major fix to the turbo lag
    • no major fix to the gear ratios, it's better now, but not as good as Maruti/Hyundai in low range
    • rattling issues with the avventura
    • no tjet - may be they thought it'll cannibalize sales of 500
    • pricing (may be it's just me) - they can price it lower, and gain from economies of scale. how much lower is debatable.
    • pricing of avventura..there'll be people who don't find marginal benefit in spending 1 lac more for an avventura
    • no 1.5d/1.6d
    • marketing
    most of these issues did exist with the earlier punto too (and add turning radius, rear leg space, fit and finish, plastic quality to it), but under the earlier leadership (NB) under which the above 2 launches happened, not many got addressed. they first showcased avventura last jan in the auto show, they had time to make a different, but somehow didnt do much.

    it's a chicken-egg situation

    selling JEEPs, FERRARI's Abarths FIATs under the same roof
    • risk - FIAT's -ve image might affect the other brands even before they get launched
    • opportunity- it might just act like a bait, and can work too :happy:. people will come look at the icons, and seeing Evo, Linea, Avventura besides them, might change their perception
    target incremental sales through new product launches or by adding more dealers in new cities/towns
    • they launched 2 new products, and that didn't bring the incremental sales they expected. there should have been some potential sales loss due to production/supply chain issue, not many will wait like the 4 guys i mentioned above
    • it's a big risk for anyone to open a fiat dealership..any prospective dealer will look at manufacturer's history, the product portfolio, and the response they got..and anyone who might have opened a dealership recently know that it's a calculated risk
    if you ask me, FIAT should first focus on
    1. fixing the issues with current portfolio
    2. Pricing & Marketing
    3. In parallel, plan new product launches in other segments
    4. Focus on adding more dealers
    If FIAT takes care of 1 2 & 3 above, 4 will happen automatically.

    sharing production lines with TATA for bolt/zest, if it's causing delays for Evo, Avventura - they should do something about this too
  10. Vidhyashankar Kannan

    Vidhyashankar Kannan Regolare

    Messages:
    271
    Hyderabad
    Hyderabad
    Avventura 1.3 90 HP
    @teja

    I had no idea that the production lines were shared by Tata and Fiat. I always assumed that they had different factories and that the Fiat factory was mostly underutilized.

    This has gone OT though I admit that the main reason for starting this topic was to see if Fiat's exports would help support its sales in India. But it is clear now that they are different lines of business. And businesses are ruthless. That's the only way any company can succeed.

    The most major difference is that Hyundai and Maruti kept releasing something new at very regular intervals. Customers know with certainty that there will be a new model coming from them all the time.

    The fact that Fiat managed this long with 2 models itself is great. And the point about Avventura pricing is bang on. When I went to purchase the Avventura, it was the the same question I had in mind. The 1.2 lakh increase over the 90 HP Evo got me higher GC, a full spare alloy wheel, side cladding, underbody protection, those useless inclinometers, better NVH levels and the roof rails. Not really worth the price increase.

    The end result is that Fiat needs to act faster if it is serious. Especially if they are planning exports.
    prabhjot likes this.

Share This Page