Jeep Returns
Founded in 1925, Chrysler is one of the Big-Three American automakers. And while it’s developed some iconic brands over the years, it’s had a tumultuous past at various stages of its existence. The most recent of which was the US government supported bankruptcy in 2009. But the company emerged from this thanks to an ingenious deal stuck by Fiat CEO Sergio Marchionne with the US Administration. Now, with the Italian automaker as the majority shareholder, Chrysler is once again ready to spread its wings. So much so that it may actually help to keep Fiat afloat, which is itself struggling in an unstable Europe.
In 2013, Chrysler will enter the Indian market with Jeep – a brand that not only has some history in India, but a lot of fans as well. In the 1950’s, Mahindra & Mahindra used to assemble the iconic Jeep in India, at the time owned by Willys Overland. The third quarter of 2013 will see Jeep reemerge in India, with the introduction of the very popular Grand Cherokee and Wrangler models – both of which will be brought in as CBUs.
And the entry of Jeep could well signal a resurgence for Fiat in India as well. Having ended its sales partnership with Tata in 2012, Fiat plans to have 120 independent dealers by the end of 2013. Many of these dealers that are based in metropolitan areas will also presumably offer Jeep vehicles as well. So, in addition to the entry of the Grand Cherokee and Wrangler, Fiat-Chrysler will also revamp the Fiat lineup with refreshed variants of the current models – the Grande Punto hatch and Linea sedan. 2014 will see a sub-4 meter SUV/CUV bearing a Fiat badge, while 2015 and 2016 will see two compact SUVs from Jeep that will be assembled in India – currently under development with help from Fiat’s Technical Center in India. Fiat will also introduce the legendary Abarth brand to add a little lust to their range in India.
With all this in place, Fiat-Chrysler aims to capture 5% of the Indian market by 2016 – from a paltry sub 1% share currently. So, we sat down with Mike Manley, Chief Operating Officer for Asia, as well as President and CEO of the Jeep Brand, to get an idea of the road ahead.
Fiat has a state-of-the-art manufacturing facility, can we expect to see Jeep products rolling off the assembly line here in India?
First and foremost, both the Jeep products, the Grand Cherokee and the Wrangler, will be imported and then sold. The feasibility of India becoming an export market for us cannot be denied. Car companies like Hyundai are major exporters, and we are strong in countries like Australia where we’ve doubled our share in the past 14 to 18 months – after which is South Africa, and even the UK. So, yes, we have a market for our products, and what we have to recognize is that we have a world-class facility in conjunction with Tata Motors. It is a phenomenal facility, and it’s not at the capacity that it could be. So, there is potential for expansion as we move forward, and we intend to work very closely with Tata to try and maximize that, which, of course, means that we could target other markets. This is a phenomenal resource that we have and we hope to use it to its maximum potential.
So, will we see a certain amount of localization as you move from assembly to actual manufacturing in India?
What we look for with each and every of our vehicles is the range of localization and its various benefits. We make what we believe is the most appropriate choice in terms of percentage of localization. As you get into the SUV’s, clearly they are going to take certain powertrains that we currently don’t have in the market. So, each will have a different level of localization. But, for us, the most important thing is that we end up with a vehicle built in India for the Indian markets at a competitive price position – of course, some would be for exports as well. The level of localization will vary according to the vehicles that we bring in. For example, on some of our SUV’s, we have bigger displacement powertrains, so whether we have the right quantity of that particular powertrain to consider localizing that or not is all part of the equation to consider when deciding whether to import the powertrain or assemble it here. As we get into the investment and other specifics, we’ll be able to go into detail about the level of localization that can take place.
What is your competition in India?
If you look at Jeep around the world, it has different competitors. But yes, in India it would be Land Rover, and specifically the Discovery because of its likeness to the Wrangler. Outside of very specific markets, mainly some of the European markets, Wrangler continues to grow very strongly and outsell its competitors. So, we have different competitors in different markets, and there isn’t just one other brand that we compete against. So, key competitors vary and we want to focus on growing our brand as well as our car portfolio in India.
What is your strategy for sales and service?
We have laid out a transition plan with Tata Motors as you know. That transition includes an aggressive ramp up of our Fiat dealership network, and we are being supported by Tata with regards to after-sales, which is very important. We already have a significant amount of potential investors who are interested in taking up Fiat dealerships. We are on track to deliver 50 dealerships by the first quarter of next year, and a total of around 200 by the end of 2013. For Jeep, we obviously need less dealerships initially, because the segments in which we are playing are not as dispersed as the B and C segments – so, we have chosen those targets very well. At the moment, the level of interest among people with regards to the brand is good, and I think the plans are solid. We wouldn’t have been able to do this without Tata’s help, and, though there is a lot of speculation about our strained relationship with them, one has to realize that for any company to grow it has to fend for itself eventually. That’s the understanding that we have with the Indian car company. We just hope that people don’t see it as a dispute, because none exists.
You have a fairly diverse product portfolio. What can we expect from Chrysler, or for that matter, even Dodge? Which segments do you intend to target?
Dodge will never come to India because it’s a very localized brand, even Alfa Romeo for that matter because the kind volumes and segments that Alfa Romeo is in are only just developing in India – maybe eventually, at some point in future we may bring it here. But, between now and 2016, the SUV segment in the market is going to grow, and that’s why we brought in Jeep. We have the strongest SUV brand in the world, and that’s why we brought it to India because it fits with that level of growth. We may not need to get another brand to India. For the time being, we will only be sharing Chrysler technology like the Pentastar’s 3.2 litre engine, which will make its way into the Grand Cherokee. We do have plans for Chrysler products in India, but for the time being we will concentrate on adding to the Fiat brand and promoting Jeep in India.
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