Fiat’s route Right products, not the largest portfolio

Raahil Chopra caught up with Enrico Atanasio, managing director, Fiat Group Automobiles India, to discuss the Italian car manufacturer’s journey in India, its plans for the festive season, and beyond, as the brand embarks on another solo journey

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Fiat’s route Right products, not the largest portfolio

You entered the market with Premier, went solo, had a distribution deal with the Tatas, and are now going solo again. How does Fiat plan to address the market this time around?

Enrico Atanasio (EA): I believe going solo is something that the customer in India would like to see from Fiat. People definitely want to see Fiat take a strong step into the market. They want to see Fiat re-establish its credibility quickly. In a way, people perceived the brand as being not very serious in the market, because the earlier association was perceived and labeled as a half-step. Now that we are establishing our new company, Fiat India Sales, we need to re-establish our credibility and people need to believe the fact that Fiat is here to stay in India.

We have never had a dedicated Fiat company in India before this step. Between Padmini and Tata we did not have any partner as such, but our sales were taken care of through an agreement on a local basis. Credibility is the main thing that we are looking on building again and we want to do this quickly.

Fiat’s challenges in India today are many; starting with (i) distribution, (ii) a limited portfolio (iii) heightened competition and (iii) the legacy of the brand with Premier (Fiat). How do you view these, and other challenges you may have to overcome? How do you plan to address each of them?

EA: Now that we are properly establishing ourselves as a national sales company from Fiat, I think this is the strongest way to show commitment. By May, we want to cover the bigger cities and the metros with about 80 dealers and complete 100 by the end of 2013. This should take care of the distribution challenge.

Regarding the limited portfolio, I don’t believe that is an issue for us. Portfolio is just an element of the presence of an automobile brand. The other element is the quality of the brand experience. This goes from the purchasing to the complete life of the product. This consists of the customer experience in the dealership, activity in the dealership the after sales service - the real life with the product. This is more than just the product.

One can bring in many products, but the reality is the success of an automobile company is made by one or two products. So I don’t think it is necessary for us to have a large portfolio, but we need to necessarily have the right product and give the best experience.

I don’t see the Premier label associated with Fiat as a challenge. I see this as a potential opportunity because Fiat belongs to the heart of the country more than any car brand, as it was one of the first cars out here. The more you go around the country, more people tell you that Fiat was their first car or their father’s first car. Therefore there is a stronger association between Fiat and Indians. Obviously, we now need to refresh this heritage and can’t look to sell the Padmini forever. So, post May 2013, we are looking forward to bringing in new products from Fiat and the Fiat Group in India.

We have new products planned to be launched. But, the first task is to establish the network. From now, till the time we get our proper network, we will not be launching new products. We will be looking at new limited edition versions of our current cars instead. Once the network is launched, within a few months we should be out with our new cars.

Which are Fiat’s strongest markets globally? How big is Asia in the scheme of things, and how big is India? What are the targets?

EA: Fiat is competing very effectively in North America thanks to our association with Chrysler. We have just introduced the Fiat brand there and we plan to build it with the launch of Alfa Romeo in the region soon.

Latin America is where we have the strongest established presence with leadership shares. Brazil is the most important market for us in this region. Fiat Brazil is a very successful company which has been leading the market for more than 20 years. Argentina is also an important market in the region for us.

Europe is the home for Fiat, so obviously we have a strong presence in this region too.
The development area for us is the Asia Pacific region. India and the rest of the countries in this region are the ones with the highest potential in terms of growth for us and many other brands. I am sure there will be a lot of opportunities in these countries. We just launched our new saloon the Viaggio in China for the market at the last Auto Show in China.

What are the current volumes of Punto and Linea? What are the sales numbers you would be happy with?

EA: Right now we are in the transition phase, because of which we are very down on our numbers. We are on target to achieve about 12,000 to 15,000 units this year. With lots of dealerships closing, and only a few opening, we are considering this year as a transition one and not one where we are looking to do a lot of business. We cannot give us a number for the next year because that entirely depends on the market. In the worldwide market, we have a share of 4.2 per cent. This goes from very limited numbers in some countries to around 20 per cent in Brazil to more than 30 per cent in some European markets. So, this is very unbalanced. The objective in the long term for India is to close the gap to the worldwide average.
Last year our market share was 0.6 per cent, so there is a lot of area to cover to achieve what we really want.

We all know that the Indian consumer is obsessed with fuel efficiency. Fiat Punto’s 21.8 kmpl promise was an effort to address that…

EA: I think the Indian consumer is a very price conscious consumer. Having said that, he is one who also needs to like the product – that is the reading I have got from the last year and a half I have spent here in India.

So it is important to propose the right product with a good level of economy. We have the economy (thanks to the product). People who see our products come back with very good feedback on the looks. This shows that we to continue to offer a decent product.

Inspite of the volatility of the price of diesel, it remains extremely important in the mind of the people. We are very strong in the diesel segment and we hope to manage to maintain the standards and improve it in the future. So, to respond to the question about the Indian consumer in short, you need to have a good product and you need to have a good overall package because money is important for the Indian consumer.

With so much focus on the diesel engines, is Fiat looking to phase out its petrol engines?

EA: Today, we are selling the majority of our products with a diesel engine. Looking ahead I don’t see that changing. Our petrol engine is very good too, but the diesel engine is what is ket. We ran a campaign on diesel in July and partially in August talking about our diesel engine.

Passenger car sales were reported to have dropped by close to 20 per cent in August, the biggest dip in 10 years. How has Fiat’s experience been? What do you foresee for the industry?
EA: The volatility of the market depends from each brand programme. What is reported outside is the sales to the dealer. This may not reflect slowdowns, and could be through shortage for some products (or other reasons too). Instead of seeing the big picture, in reality we should monitor the customer purchases, and this was not (down by) 20 per cent for sure.

We›ve also seen Fiat involved with cricket in the past (Ganguly won a Siena in 1999 as man of the series of a tournament). Any associations with sporting events lined up?

EA: For the moment, we are not interested in any associations. We will look into this post 2013. But for now we want to clarify our brand’s personality. We are launching a strong and massive campaign around the festival season. Once we have a robust number of dealers in place, we will be doing some kind of brand communication campaigns. Those will be around the fact that Fiat is very serious about the Indian market and is here to stay.

What has been the response to the Caffes opened by Fiat in Delhi and Pune?

EA: The response has been very good in terms of showroom traffic and enquires. Fiat Caffes are points through which one can appreciate the brand experience in a different way. But at the same time, they are selling points. The Caffes give customers the chance to go there and book a test drive, see the product. Overall, it has received a good response from the customers and that is very encouraging.

It is not strange that some dealers are asking us to use those standards for new dealerships they are interested in. This is interesting for us; even though dealers knows it will cost them more to establish a higher level of standard, they want to go for the Caffe format as they understand there is an opportunity there.

Since July, Fiat has been running 10-second TVCs. What was the idea behind these short spots?

EA: The use of the 10-second spot with the right creativity gives the brand a lot more presence with a lower or similar cost compared to a 30-second film. So, it is a very cost effective approach, which we like. A very good idea is required for this to work, and it worked for us with the cooperation of Saints And Warriors. The agency is working very hard to provide us with a very cost effective campaign. In our transition period, being cost effective is very important.

What does Fiat have in store for the festive period?

EA: A 360-campaign will be released for the period. The campaign will be rolled out in the big cities first as they are our main focus currently - we also have an agreement / arrangement with some dealers for this. For the rest of the country, we will be using the reach of television and digital to get in touch with consumers.