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Fiat plans to use India as global source

Aug 17, 1999

According to newspaper reports, Fiat of Italy plans to turn its facility at Ranjangoan, Maharashtra into a global sourcing base. The Rs 16 bn Ranjangoan facility was originally planned as a domestic production base. The plant will be commissioned only by 2001. The delay is being ascribed to the emerging gap between Fiat's earlier market estimates and actual sales. Fiat has a presence in the mid-car segment through Uno and Siena. The recent surge in small car sales has encouraged many car companies to unveil ambitious expansion plans. For instance, TELCO has plans to step up Indica production to 5,000 cars a month from September 1999. Hyundai also has plans to enhance Santro's production.

Companies in the mid-car segment have outlined ambitious plans to boost market share. Honda Siel will resort to imports in order to boost local market share. Ford India plans to introduce three versions of its Ikon model by November 1999. All these launches will make the mid-car segment even more crowded. This is one reason why Fiat's sales estimates for the Siena and Uno have gone awry, and have failed to meet the company's expectations. This has forced Fiat to look overseas to sell excess production at its Ranjangoan unit.

In a bid to enhance its presence in the country, Fiat is sprucing up its distribution and sales network. It will increase its dealerships from 45 to 70 by end of 1999. It will also enhance the number of service outlets from 65 to 200. This will enable the company to compete with other auto majors like Opel, Maruti, Ford and Honda on even keel.

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