(ATF) Fiat Chrysler Automobiles’ (FCA) decision to pump in more money in India, even as the country’s auto sector is struggling to beat a two-year long slowdown, has come as a breath of fresh air for an industry that is in desperate need of a boost and a vote of confidence from foreign investors.
FCA said on Tuesday it will invest $250 million over the next two years to grow its presence in India as the maker of the Jeep brand of sport-utility vehicles (SUVs) plans to launch four new models and increase local sourcing.
The investment will be made to locally manufacture a mid-size, three-row SUV, assemble the Jeep Wrangler and Jeep Cherokee vehicles in the country and launch a new version of its Jeep Compass SUV, FCA said in a statement.
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Partha Dutta FCA India’s president and managing director also said that the emphasis would be on localisation and making in India for the country and the world. The plans also include setting up local assembly lines for the Wrangler and Grand Cherokee branded vehicles which are imported.
“Our primary objective is to move from imports to local production, local assembly and source locally where possible,” Duta said in a comment to the media.
The investment has come at a time when some of the global automakers are folding up their operations or limiting their exposure in India.
Earlier this year Harley-Davidson announced that it was folding up its Indian operations by shutting plants, while General Motors exited the country in 2017. Japan's Honda Motor too shuttered one of its two plants in the country after announcing the pull-out of two of its models due to falling sales, post-Covid.
Boost to Indian auto
The investment also comes at a time when automakers globally have been battered by the pandemic, and automakers in India have been further stung with the domestic market slowing down even ahead of this in 2019, that saw a shrinkage of 18% year-on-year.
“The investment by Fiat in India clearly implies that despite all the short-term challenges in the Industry, India holds a clear potential for becoming a robust auto industry for the world and play an important role in the country’s vision towards $5 trillion economy,” Rajesh Menon, Director General, Society of Indian Automobile Manufacturers (SIAM) told Asia Times Financial.
FCA currently has less than a 1% share of India's passenger vehicle market. Adding new vehicles to its portfolio is expected to help the automaker increase local sourcing of components, achieve better economies of scale, reduce costs and boost sales.
The new investment also strengthens India’s Atmanirbhar Bharat (self-reliant India) initiatives for serving the global auto community, says Menon.
Before FCA, India also saw the entry of new automakers over the last couple of years including South Korea’s Kia Motors and China’s SAIC Motor Corp.
More to come
FCA, according to its statement, will produce and assemble the new SUVs at its car plant in western India, which it jointly owns with domestic automaker Tata Motors.
FCA’s three-row SUV is expected to compete with Ford Motor’s Endeavour and Toyota Motor’s Fortuner SUVs.
It has plans to bring in electric vehicles as well, “in the mid to long term” according to Dutta.
Reportedly, FCA future plans include revival of the FIAT badge in India if it makes a business case, the company said. Besides, the Italian-American company said last month that it would invest $150 million to set up a digital hub in India that will develop proprietary vehicle technologies and software engineering to support global operations.
The latest round takes FCA’s total investment in India to over $700 million, including the $150 million in the new global tech centre.
(With reporting by Reuters)