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FIAT India Sales

Discussion in 'Fiat India News' started by amogh, Feb 5, 2015.

  1. prabhjot

    prabhjot Esperto

    Messages:
    2,902
    Location:
    delhi ncr
    @SwifttoPunto Hi.

    These figures for 2015 do not support your conclusions and support mine, instead. Why?

    Because they all lose money, but in india for india: some like ford, vw, toyota and nissan-renault have had HUGE export numbers far larger than their india sales. i.e., when you see their company filings you have you adjust for that. ergo: India is the graveyard for profitability for mnc car companies, due to its oligopolistic nature, twisted tax etc policies etc: sell profitably for self and more importantly for dealers and service centres has proven FAR FAR harder than 'make in india' for exports plus india-as-cheap-basic-technical/engineering/it-centre.

    GM, Ford, VW group, Toyota, and Renault Nissan all have large and ongoing losses, EX-EXPORTS. That is why GM may be leaving India altogether as i predicted as highly likely here over a year ago, vw+skoda is and will remain on hold for new investments and products (mass market) till 2019, Toyota is on hold till 2019 at best for mass market models, Ford's ceo has to make huge apologies at their global investor conference call for the bombing of the indian new factory and new 'thrid world models' (figo aspire). Even Nissan has been on a major hold, while renault tries to breakthrough at low low margins with the KWID. besides Nissan, despite its huge export revenues, is crediting a few thousand crores of state govt subsidies which it actually has NOT recieved in full yet (last i checked). Their India-only profitability is awfully negative, despite or because of a slew of 'low cost' models from 3 seperate brands year after year!

    And that does not even address the REAL issue, which is the crisis over the last 2-3 years in so many dealerships and service centres of all these very firms in so many cities.

    The Indian car market's lucrative for suppliers, though, such as ;-) FCA and Magneti Marelli: their margins are high, plus they can export too, plus they enjoy scale since the major indian suppliers and component jv firms are now large, high quality and very cost competitive.

    See the car market's been in a slowdown since 2012, with some pickup in 2016 and now 2017 (minus the war on cash episode in nov and dec, minus also the longterm crash in luxuury car sales). That pickup too is not what it looks like, if you see things from a return on investment perspective. It is based on a very high number of low margin Uber OLA type taxi model sales (hogged by the usual 2-3 firms plus datsun) AND by all-new models by the big dada/oligopolists of Maruti, hyundai and Mahindra. Now tata is trying to regain traction (their losses from the India pv and cv businesses are mounting away though as we speak) with all new models, each of which costs many 100's of crores to develop and launch BUT Ford despite huge price cuts and large ad spends cannot save the financial day for the Figo and Aspire from the all new Gujarat plant, despite VERY large subsidies form said state government.

    I reiterate my stand, and the 'on hold' that so many firms are on confirms this: that India must be a 'make in' location for exports-first, ONLY then does it make any prudent sense to try to go up against the dada-s (ms, hy, mahindra, maybe tata in the future again?) Look at the paltry total failure to earn their cost of capital by Honda in india: huge investments, new india special diesel engine, 4-5 new models for pennies-on-the-yen (although the yen is being printed and handed out for free to japanese corporations, still!)

    India is the hardest large car market in the world to make money for a non-ms/hy/mahindra mnc oem, largely because of its intensely concentrated/oligopolistic character, far more than any other car market in the world, to add to some of the world's most extreme consumer behavioural traits (obsession with mileage and resale and service ease and assurance, highly distrustful of most brands, very low brand-identity awareness or concern, generally risk averse, generally indifferent to engine and ride/handling/build/safety/engineering quality-and-depth.)

    i.e., fca's business model here now is the perfect one. High margin supplier role (1.3 and 2 litre mjd engines, transmissions, amt-s, lighting) PLUS 3 localized make-in-india Jeeps, but export-centric enabling a competitive, high-usp (will it sell well? let's see) well priced offerings for 'sell in india'. All-new FIATs simply do not fit this last, imo binding constraint (no export scale, no domestic retail sscale, ergo very very high chance of losses for the company but esp for dealers who're thereby rendered unsustainable: back to square one!)), which would be why it, like vw, like toyota, like nissan is at best delayed through 2019 at the earliest, or at worst 'gone' from India (while spares and service support continues at the new Jeep centres, plus the many third party official service non dealer workshops in many cities.)
     
    amitshedha, Bala and revvingengines like this.
  2. SwifttoPunto

    SwifttoPunto Amatore

    Messages:
    78
    Bangalore
    Punto Evo 1.3 90 HP
    @prabhjot you can interpret it whichever the way, but the figures are their. Also recurring royalty, lump sum royalty, management fees, interest, profit on imported components, etc all are facts. No company sets up a factory in a particular market only to cater to that specific market. So having a export component is overall strategy that few of them may require to have. I stop at this.
     
    vista7155 likes this.
  3. prabhjot

    prabhjot Esperto

    Messages:
    2,902
    Location:
    delhi ncr
    Believe me all auto mnc oem managements are in 'how the hell to cope with the indian market' conundrum, one that will/is getting more complicated due to the gst, introduction of new emissions and crash safety norms (e.g., bs6 supposedly by 2020), the losses caused by 'demonetization' and by the sudden waking up of the polity via the ngt and courts to pollution and air quality issues etc.

    Read up a bit on this: i invest a lot (small amounts) in indian auto component companies and in auto companies abroad (e.g., fcau shares) plus in indian 2 wheeler companies, but believe me the indian operations of the large non ms/hy/mahindra/maybeTata are a source of universal financial and managerial bewilderment, one that has reached the point in some cases of serious global worry and complaints by investors (e.g., with Ford and with GM as revealed on their global investor calls.)

    Accordingly MAJOR restructuring and esp consolidation is beginning here, as seen with the tata-vw tieup, the likelihood of GM selling out or shutting down, Ford and say Mahindra tying up again, Toyota and Suzuki tying up, Tata and fca cooperating on Ranjangaon suv-s. etc etc. The Indian market, ex-exports, is and now almost every analyst and global auto oem manager recognizes this is the hardest in the world to crack (sustainable profitability) and cannot be done in the standard ways. The jv approach, maybe one or two outright cases of giving up entirely (e.g., Chevrolet?) is essential, as is launching ONLY exportable models here, ELSE getting financially 'jacked' by the sheer scale, spread, and financial might/margins of maruti, hyundai, mahindra is inevitable.

    Firms may be doing transfer pricing, playing accounting tricks etc, but you know what? The 2015 auto industry profitability figures, bad as they are, are actually much better than the figures in the years' preceding. PRECISELY because firms that invested in large capacities only for India+saarc had to start exports instead, leading to at least a modicum of financial buoyancy for the Indian operations. Toyota and VW never had export plans at the outset for the etios and the indian polo vento. Even so, capacity utilization is dismal at the following firms: tata, tata-fiat jv, ford, chevy.

    The question is this: India is a large and growing-again but singularly 'aspirational' yet credit-fuelled and totally 'third world' market. BUT very hard, very high risk and very very expensive to compete against the oligopolistic, big dominant firms. And with an unpredictable policy, tax, regulatory, legal, foreign currency rates scene (unusually so even by 'emerging markets standards.)

    How to best address that challenging fact, based on the chastening 'learnings' of the last 10 odd years? Toyota, the mightiest car firm in the world, has decided it cannot without help from Suzuki and Daihatsu. Tata has decided it cannot on its own, or cannot afford to: hence their reliance on the Ranjangaon jv for new suv-s and now with vw+skoda for large-volumes of badge engineered and contract-manufactured models. Likewise vw+skoda themselves. Chevy is shutting one factory down and may exit totally, etc.

    In this scenario, FCA's imo got a sound approach that is finally going to work: achieveing sustained and sustainable AND profitable 'sell in india' and not only 'make in india for exports', necessarily via Jeep as against FIAT, and via magneti marelli business+engine supplies etc. I'd guess the 2 litre mjd2 will see one or two other firms sign on for engine supplies too, given that it is the only large bs4-->bs6 engine localized by any oem. Hopefully if this works well enough for dealerships, come say 2019 or 2020 new India-only, non export FIATs can then piggyback ride back to the market, and/OR they also find large export volumes for india-spec FIATs (unlikely imo.)
     
  4. Krunal Bhatt

    Krunal Bhatt Amatore

    Messages:
    149
    Location:
    Ahmedabad
    Ahmedabad
    Punto Evo 1.3
    @prabhjot
    Your analysis "could" be right, (couldn't read such a long posts to come to a conclusion :wacky: , my lack of patience, nothing else).
    But, after reading the profit% of FCA, what I think is, future of FIAT brand(and FCA as a group) doesn't depend on success/failure of JEEP. If they can produce such profit by selling components ,and couple of hundred cars along side that, then they can surely take "RISK" of bringing new replacement models for punto and linea.
    With JEEP profit margin will be reduced for sure, for at least couple of years. Due to initial setup cost.
    So, MY conclusion is FIAT is only car brand that can survive in India for FCA.
     
  5. Tony

    Tony Esperto

    Messages:
    2,070
    Location:
    Kalamboli, Navi Mumbai
    Kuwait
    Grande Punto 1.2
    Fiat is doing a great job
    People are getting in Build Quality
    For sure fiat will get new models and jeep will be on higher class
     
    prabhjot likes this.
  6. sriramr9

    sriramr9 Amatore

    Messages:
    219
    Location:
    Chennai
    Sergio is well informed, he is well aware, FIAT as a brand cannot revive its marque and fight head to the likes of MSIL and Hyundai. That s the reason JEEP proposition was brought in, since there is already ranjagaon available keeping churning out the old Linea and Punto Evo and some dressed avatars like Avventura and urban cross here and there. Bottom line is to keep concentrating on jeep launch plus work to succeed in export plans and of course focus on product quality for the drive trains sold to MSIL & TATA. That's it.

    If Sergio feels the brand should still exist maybe he may bring in a new offering or maybe not, it has not happened for last 8 years, hope is less that we will see a radically new entrant with FIAT marque.
     
    prabhjot likes this.
  7. prabhjot

    prabhjot Esperto

    Messages:
    2,902
    Location:
    delhi ncr
    @sriramr9

    Yes this is only a small instance of what motivated Sergio Marchionne to takeover the Chrylser+Jeep+Ram+Dodge+Mopar america-centered brands in the first place. Scale, options, geographical and segment/price risk diversifications AND profit possibilities.

    Also we must recall that FIAT has for decades been a lhd Europe and latam centered brand (+trucks, buses, tractors, industrial robots, marine engines, etc etc), very small in RHD countries, most of whom are 'developed' ones. India has always been an exception to that rule.

    Now, it seems: for fca India will be treated like a 'developed market' in terms of which models will be brought and localized, since the idea will be, in the main, to export to RHD developed country markets (i.e., uk+ireland, australia+ n zealand, japan.)

    i.e., 'global spec' models i.e., NOT latin american FIATs but global new Jeep models (Compass, Renegade.) Plus a latam-new-Punto-Jeep twin below the Jeep, whcih will be an 'emerging markets' centric model.

    Why is this approach better? The Indian mass market is too tough and too price/resale/etc conscious for say the 'new Punto' x6h etc to make any margins here (too expensive to make at market benchmark i.e., maruti and hyundai cut-prices, no scale, no export prospects) BUT the c2-->d1+ segments have and will continue to grow in size at elevated price points that make Jeep models (say) potentially viable. The Indian c2+d1+ segments are beginning to resemble global specs and prices/margins etc AND in sales-numbers.

    Better therefore to focus via Jeep at the c2-->d1+ segments since those models are also global and so-exportable, and avoid the 'third world specials' template that still predominates so much in the indian a,b, and c-segments.

    All-new FIATs can always be brought back in a few years' time IF the market grows and opens-up further in the b and c segments, and IF the new crash and engine/emissions etc regulations (2020 and beyond?) leave much profitability-scope for anyone other than the big 2-3-4 brands/firms in the mass a, b ,c-segment market (ms, hy, maybe mahindra, maybe tata or honda or toyota.)
     
    Ravi_M likes this.
  8. Bharath Balasubramanian

    Bharath Balasubramanian Timido

    Messages:
    24
    Hyderabad
    Fiat Enthusiast
    Hello All,

    This is probably the best place to ask this or maybe this has already been discussed here... just that i cannot find it.

    2015 Punto Abarths are available for sale at dealerships. I guess there are just 15 of them left and are probably available at discounted prices. Is it worth the shot?

    Regards
    Bharath
     
  9. limraj

    limraj Esperto

    Messages:
    1,357
    Trivandrum / Bangalore
    Linea 1.3
    Take a careful PDI. Ask to replace tyre, battery, oils etc & bargain hard. And then enjoy the scorpion.
     
  10. Turbothinghy

    Turbothinghy Esperto

    Messages:
    1,230
    Pune
    Punto Evo 1.3 90 HP
    Its definitely worth a shot. But do a thorough PDI (as said by @limraj ) and also make sure that you get 3 years of warranty.
     

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