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GM, Fiat, Maruti to flex alliance muscle

Bijoy Kumar Y & V Phani Kumar in Mumbai

The Indian automobile industry is set for a dramatic change.

General Motors, the world's largest automobile maker, is leveraging its European and Asian alliances with Fiat, Suzuki and Daewoo.

Quite simply, Fiat India, Maruti Udyog and GM will form a giant automobile bloc, co-operating and combining to take on the nine other automobile companies in India.

The multi-pronged strategy, to be rolled out over the next two years, involves product sharing, cross-branding and sourcing of engines from one another.

Suzuki is already in talks with Fiat to source a diesel engine for its various Maruti models in India. Sokichi Nakano, executive vice-president at Suzuki, went on record in the European media saying Suzuki wanted to install Fiat diesels in any possible model in the Maruti line-up.

GM and Fiat are working on a next-generation world car that will replace the A-178 platform (Palio-based cars). The new car is likely to be built at the Ranjangaon (Maharashtra) plant of Fiat by 2004.

"We are in talks with Fiat for exploring various possibilities thrown up by the alliance, and that includes the power train and new models," Frederick Henderson, GM's group vice-president and president of GM Asia-Pacific, who was recently in India, told Business Standard.

To begin with, GM will realign its model line-up in India, drawing on the portfolio of the now defunct Daewoo Motors, Korea.

It is considering relaunching the small car Matiz, and launching the mid-sized Nubira. These models will be built by GM India, but not under the Opel brand name. GM may also introduce the Chevrolet in India. Hence, the Matiz in its new avatar may become a Chevrolet.

"We have a big plant (at Halol in Gujarat). We want to put a couple of products in that plant to win in the market. Chevrolet is a brand that can be used here. But more than the brand, what we could use here is the right product," Henderson said.

"We are certain about entering various segments and achieving higher volumes," said Aditya Vij, president and managing director of GM India. The company has, however, ruled out the possibility of using Daewoo India's Surajpur plant to manufacture these products.

The Matiz, which is expected to go through a major revamp soon, may be the next product from the Halol plant. Also, the mid-sized Nubira, which comes as an estate car as well as in the form of a sedan, is likely to replace the ageing Opel Astra from the GM stable in India. However, Henderson stressed that the Corsa was only at the beginning of its innings in India and would certainly continue for a while.

Opel will now cement its premium tag with the arrival of the new Vectra sedan through the completely built unit route, while the Chevrolet brand will be built by using new models.

Sources at Suzuki also said Maruti might build a model that would be sold by GM India. The company is already testing the Isuzu Panther utility vehicle, which will have a high local content when it is launched in India.

Maruti, meanwhile, needs a diesel engine. It has nine petrol-powered cars but only the Zen-D in the diesel segment.

For the Zen-D, Maruti uses imported Peugeot diesels that make it unviable for mass production.

With the introduction of the 1.9-litre turbo-diesel engine, currently being localised for production in India by Fiat India, Maruti will be aiming to get a chunk of the diesel passenger car market, which accounts for about 15 per cent of total car sales in India.

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