How Stellantis hopes to take advantage of the huge Indian market?


India as a surprise market?

Stellantis chief executive Carlos Tavares expects India to be a profitable market and a bigger growth opportunity than the automaker anticipated, as it faces challenges in countries like China and Russia .

India, where Stellantis sells its Jeep and Citroen brands, accounts for just a fraction of the automaker’s global sales, but Mr Tavares said he expects revenue in the South Asian country South more than double by 2030 and operating profit margins in double digits over the next two years. For years, Western automakers have struggled to make money in India, a market dominated by Asian automakers Suzuki Motor and Hyundai Motor with their low-cost small cars.

“It is possible to be profitable in India if you do things the Indian way,” Tavares said during a virtual media roundtable late Tuesday.

According to him, this means sourcing parts locally, vertically integrating the supply chain to keep costs down, and locally designing cars with the features that Indian consumers want and are willing to pay for. .

New strategy for Stellantis

Stellantis, born at the beginning of 2021 from the merger of the French group PSA and Fiat Chrysler (FCA), presented in March a new group strategy aimed at increasing revenues and maintaining profit margins at a high level, while stepping up efforts to deploy electric vehicles (EVs).

The focus on India comes as the world’s fourth-largest automaker faces headwinds in China, where it is revamping its strategy amid sluggish sales and stiff competition, and Russia, where it has suspended its production due to the war in Ukraine. “The challenges…give India a bigger opportunity, even bigger than in the past,” Tavares said.

At the heart of its plan for India is Stellantis’ smart car platform program, which the group has developed in the country to enable it to launch small gasoline-powered cars under four meters in length, Ms. Tavares. Small cars are taxed at lower rates, making them more affordable. The company will also launch electric versions of its small cars from next year, he added.

Top global auto markets in 2021, based on new car registrations. With an almost equivalent population, India is still far behind China, and appears to be a gold mine for manufacturers seeking to grab new market share (Source: Statista)

Small cars have been the Achilles heel of most global automakers in India. Trying to compete in this space has been a race to the bottom for manufacturers like Ford and General Motors, leading to their withdrawal. But Tavares is confident in Stellantis’ approach: before building cars, it strengthened its supply chain.

Stellantis manufactures its powertrains and gearboxes locally and sources over 90% of its vehicle content from India. Its engine plant in southern India is a global cost and quality benchmark and it plans to do the same at its two car plants, where it manufactures Jeep SUVs and Citroen cars, Ms. Tavares. “We have been working for many years on localization, vertical integration in India, to take advantage of India’s smart frugality,” he said.

The automaker also wants to source cells and batteries from India when the supply chain expands, Tavares said, adding that would be the only way to build affordable EVs. Stellantis has less than 1% of India’s 3 million-unit-a-year car market, but Tavares said it was not chasing volumes in India or globally. “We think the world is changing and in some cases being too big can be penalizing,” he said. Stellantis has invested over €1 billion in its India business since 2015.



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