'Fiat India is here to stay'

Fiat India seems to be sending a clear message with the launch of the Palio N V in Mumbai on Tuesday -- it has long-term plans for the country and is in no mood to pack its bags.

Alberto Montanari, chairman and managing director, Fiat India said in an exclusive interview with Parvathy Ullatil just after the launch that it hopes to break even in 2004-05.

What are the company's short-term objectives?

Our main objective is to recover the company's profitability. This can be achieved only through improved sales in terms of volumes. So driving up our volumes will be our number one priority for sometime now.

We will also concentrate our energies on running our operations in a more cost effective way. This will involve employing people who are inter-functional and improving the internal efficiency of the company.

When will the company's operations break-even?

Ideally we want to break-even next year, but that might not be possible. But we will be able to bring down the break-even point to a normally acceptable level.

From where we stand today, we will break-even if we can sell 17,000-18,000 cars in 2004-05 fiscal. This number is variable depending on the product mix.

What are the company's prospects this fiscal?

We will lose money this year but that is not so difficult to understand considering we began the year with losses on our hands. Our operations around the world were under a considerable amount of strain with the workers strike.

But the situation is very different now, we have resolved our internal issues and now we will focus solely on our products. In terms of volumes, we hope to sell 13,00-14,000 cars this year.

How important is the Indian market for Fiat?

The Indian market is very important and the fact is made apparent by the huge investment Fiat has already made in this market.

The Indian market is also a very important hub for component exports. The B and C segments are growing fast and we will cash in on this growth. Fiat India is here to stay!

What are the challenges you will face while closing in on your target?

We have been trying our best to take the company towards profitability but it is clear that our best is not good enough when we are limited by low capital availability.

Fiat, the parent company has been mopping up our losses and pumping in fresh capital but now its time for us to deliver.

What approach will you adopt in taking the company towards profitability?

We will concentrate on one product at a time, now it is the Palio. Soon it will be the Adventure and then the Sienna. The integrated approach of trying to develop all the products at the same time will not work. Some bad decisions have been made in the past, the markets have been underestimated.

Has your decision to work on a single product at a time been prompted by the mistakes you made with the Fiat Uno?

The Uno has a strange history. The car did not receive the attention it deserved because it got caught in the tussle between Premier Automobiles Limited and Fiat before they parted ways.

The car was not improvised fast enough but the kind of volumes Uno diesel still does just goes to show that it is a fine product.

Your cars have earned the reputation of being the least marketed cars, are you doing anything to remedy the situation?

Our advertising budget per car is determined by the volumes we achieve. With the launch of the Palio NV, we will be back in the media with both a print and a television campaign. Every car launch has been followed by an aggressive advertising campaign to promote it.

Your cars also enjoy the distinction of being the cars with the highest dealer-discounts in the market. Do you think something like discounting can replace traditional marketing tools?

Discounts are nothing to be ashamed of, they help us achieve volumes. Ultimately we have to maintain a certain amount of cash flow, which will come only with volumes. In our case discounts have been working very well for us.

It means higher volume of sales even if each car brings us a little less money than expected.

How important is the Indian market for Fiat?

The Indian market is very important and the fact is made apparent by the huge investment Fiat has already made in this market. The Indian market is also a very important hub for component exports.

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