Fiat's Indian Journey
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Case Code : BSTR020
Case Length : 7 Pages
Period : 1996 - 2002
Organization : Fiat India Limited, Premier Automobiles
Pub Date : 2002
Teaching Note : Available
Countries : India
Industry : Automobile & Automotive
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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The Failed Resuscitation Attempts
In March 1996, Fiat signed an agreement with PAL to import and assemble CKD kits of the 999-cc car 'Uno.' Uno, launched by FIAT in 1983, was the most successful car in the company's history.
Uno was launched in 1996, amidst much fanfare and acquired around 3,00,000 bookings in just three months. However, in June 1996, just when the company had closed the bookings, the employee union at the Kurla plant forced a lockout. The lockout was the result of a go-slow agitation led by militant trade union leader, late Datta Samant, started in April 1996. The lockout was lifted in November 1996, after a majority of the workforce defied the Datta Samant-led union and opted to go back to work. As a result of the lockout, production suffered greatly and the company could not deliver the booked vehicles in time - only 617 cars were delivered by the end of 1996. The non-delivery of the vehicles upset many consumers and around three-fourths of the orders were cancelled...
The Last Hope?
Four versions of the Palio were launched in September 2001; the prices ranged from Rs 0.349 million to Rs 0.499 million. Analysts remarked that these models were priced competitively against the Santro and the Zen.
The entry-level models of the Palio (EL) and the Santro cost Rs 0.349 million and Rs 0.334 million respectively. Fiat claimed that it offered a net Rs 26,000 worth of content more than the Santro. The market seemed to agree with Fiat as the car was received rather well. In just two days, over 1100 cars were sold. This prompted Fiat to increase the daily production at its Kurla plant in October 2001. Bianchi said, "While daily production at the Kurla plant has already been increased from 50 to 70 cars a day, we plan to increase it further to 100 cars a day by mid-October and 150 by November-December." The company was also planning to add a third shift and produce 220 cars a day. Some analysts remarked that the market's initial excitement over the Palio seemed to be a repetition of the Uno and Siena episodes...