Ranjangaon may be Fiat global base

MUMBAI: Fiat is exploring the option of using its Ranjangaon plant near Pune as a global base for some key models in the future. This could even include its own low-cost car planned for Europe and other advanced countries.

In an interview with DNA Money, Sergio Marchionne, chief executive officer of the Fiat group, said the Ranjangaon facility could be used for manufacture of select models for the global market.

“It eventually boils down to standardisation of volumes. Perhaps our own low-cost car for Europe could even be made in India.”

The company had put in a lot of resources, time and money in creating Ranjangaon, he said. “This facility has the infrastructure to build the Fiat brand in India. It can be an integral part of the manufacturing footprint of Fiat worldwide and that is a big issue for us,” Marchionne said.

Fiat has tied up with Tata Motors in a 50:50 joint venture to manufacture over 200,000 cars and powertrains in this plant.

The Linea and Grande Punto have been identified as the models for India as part of a business plant which will see 70,000 Fiat cars produced here till 2010. The balance will come from Tata Motors.

However, Marchionne did not think the relatively modest numbers would be a limiting factor for the future.

“It is a world-class plant and we will find ways to increase capacity. When we built our facility in Poland, it was designed for 250,000 units and the last time I saw it, it was in a position to run over 600,000 units,” he said.

The Fiat CEO reiterated that the low-cost car would clearly not carry the company’s brand.

“We need to be very careful about one thing which is that the vehicle concerned cannot be a Fiat which is a premium brand today in the segment it operates in. We see some potential in Europe for this low-cost car though it may not be a large part of the population,” he said.

According to him, there could be some fit with Tata Motors for this project though this would be “more on the architecture side”.

Asked if it would take over from the Nano platform, he replied that there were many options ahead and this could be one of them.

Interestingly, on the subject of small cars, Fiat had recently bought a 70% stake in Serbia’s Zastava car company for $1 billion. This facility makes the Punto and Astra for East European markets with plans afoot to manufacture the Topoliono on the same platform of the Grande Punto and Fiat 500.

Marchionne said Zastava was “an extension” of the manufacturing platform out of Poland. “We need additional capacity to meet small car demand in Europe especially for the A and B segments in the coming years and this is where Zastava fits in for capacity expansion. Rajangaon will, likewise, be an integral part of that global footprint,” he said.

On the Tata alliance, there have been reports of Iveco, the truck arm of Fiat, entering the picture too but the Fiat CEO said this could wait for some time.

“It may be premature to talk of any deepening of the relationship on the Iveco side because we need to wait till some of these markets mature and require the level of technology.”

“For the moment, the Indian truck segment is not fully developed on the technology front,” he said.

Also, the overseas foray for Tata pick-ups could take a wee bit longer. There were plans to roll out the company’s Sprint from Fiat’s plant in Cordoba, Argentina but that has been put on hold for the moment.

“Both Tata Motors and Fiat are not as convinced as what we were originally. The market does not hold the kind of demand that we thought it would,” Marchionne said.