Fiat to relaunch Palio to grab a bigger small-car pie

Fiat India is planning to launch a new refurbished Palio with a new name in India to gain a better market share.

According to sources, Fiat will launch the car just below the Grande Punto hatchback. This new car would be powered by engines from 1.0L petrol to 1.3L multijet diesel.

Fiat phased out its hatchback Palio from the Indian market to make room for its new small car Grande Punto. The company currently sells Palio only in Euro III markets in India which it manufactures at the Ranjangaon plant. However, Fiat has managed to sell only 300-400 units in the nine months of this fiscal.

When asked about Fiat’s plans to relaunch Palio, Ravi Bhatia, vice-president - commercial, Fiat India, said, “There are lot of speculations in the market as people are excited about our brand. We are currently at the stage of evaluation.”

The sub-Rs400,000 category of small cars is one of the fastest moving segments in India.

Major players in this segment include Chevrolet Spark/Beat, Hyundai Santro Xing, Tata Indica and Ford Figo. Bhatia said there is a good opportunity in this segment especially in a market like India.

“But right now we are concentrating more on winning customers’ confidence back,” he said.

Fiat India Automobile Ltd is a 50:50 joint venture between Italian automaker Fiat SpA and Tata Motors. Both companies entered into the joint venture in December 2007. With this, Tata Motors gained access to Fiat’s diesel engine technology. Fiat and Tata Motors invested `4,000 crore in the Ranjangaon plant to make Fiat and Tata cars and engines.

Fiat India is eyeing 5% market share in the country by selling as many as 130,000 cars per year by 2014.

The company currently offers two competitively priced vehicles —Fiat Grande Punto and Fiat Linea.

The declining sales of Fiat products are a major cause of concern for Fiat and Tata Motors. Fiat managed to sell only 15,184 cars during the nine months of this fiscal. It sold 25,920 vehicles in 2009-10. In December it sold 271 cars.

Tata Motors ramped up its sales and service network when it decided to retail Linea and Grande Punto jointly with Fiat. “Initially when we started working under the tie-up, we had only 100 dealers within the network. But now we have 170 plus dealers at 130 plus locations,” said Bhatia.

According to Mahantesh Sabarad, senior vice-president - equity research, Fortune Securities, “Companies like Hyundai and Maruti Suzuki have failed previously when they relaunched Getz and Versa, respectively. Fiat’s reach is limited. The company needs to bring in better upgraded models if they want to have a good replacement market in the metros.”