Divorce from Tata Motors brings good tidings for perennial laggard Fiathttps://indianexpress.com/article/business/companies/divorce-from-tata-motors-brings-good-tidings-for-perennial-laggard-fiat/

Divorce from Tata Motors brings good tidings for perennial laggard Fiat

Italian carmaker Fiat, which has found the going tough in India despite...

Italian carmaker Fiat, which has found the going tough in India despite riding on Tata Motors’ distribution network, has posted robust growth in sales for FY14, the first full fiscal of operations since the company went solo.

It has reported an 88% year-on-year jump in revenues from India at Rs 3,863 crore for fiscal 2014, according to data with the Registrar of Companies (RoC). The carmaker’s profitability before extraordinary, exceptional and prior period items also rose significantly to Rs 237.6 crore, 30% higher than the year earlier. Net profit, however, fell 19.5% to Rs 216.6 crore. The decline in net profit was due to an exceptional gain of Rs 860 crore that Fiat made in fiscal 2013, and which was absent in the last financial year.

The Italian carmaker, which also owns marquee brands like Ferrari and Maserati, saw car sales in India decline from 22,587 units in 2009 to 8,801 cars at the end of 2013, due to poor visibility and a thin product portfolio. It had entered into a tie-up with Tata Motors to use the latter’s distribution and after sales service network for its cars in India.

The association didn’t yield any favourable results for Fiat and it came to an end in March 2013. Since then, Fiat has been focusing on improving its marketing and distribution channel in India. It has also established its own dealer network and opened showrooms branded as Fiat Caffes across India.

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An email sent to the company seeking comment did not elicit any response. However, sources within Fiat India claimed that dealers showed more enthusiasm once Fiat moved away from Tata Motors to market and distribute its cars. This gave more clarity to the dealers in terms of Fiat’s future strategy and led to a rise in volumes, they said.

Following the separation from Tata Motors, which has been finding it difficult to sell its own cars in the Indian market, Fiat’s sales in the country have improved. It sold 11,980 cars in FY14, 87% more than in FY13, at the end of FY14.

During the period under review, the company’s employee benefit expense more than doubled over the year earlier to Rs 127, an indication that the company is ramping up manpower in the country, though there was no official confirmation of this.

The carmaker is now focusing on scaling up its dealer network and product lineup. After setting up 108 standalone dealerships since April 2013, the company is aiming to set up 150 dealerships by December 2014.

At present, the carmaker has four models for sale in India, including the recently launched Punto Evo. Fiat aims to have a lineup of nine models in India by 2016, which will include the soon-to-be-launched Avventura, a crossover utility vehicle, based on the Punto platform.

| The Financial Express