The Telegraph
Since 1st March, 1999
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Fiat India balks at GM control
- Auto start: The story behind the wheels

New Delhi, March 23: Fiat India wants its parent Fiat Auto not to exercise the ‘put’ option which can force General Motors (GM) to buy Fiat, chairman and managing director Alberto Montanari said.

“We would like to remain separate from General Motors,” Montanari told The Telegraph in an interview. “We (Fiat India) don’t have a screw common (with General Motors India)!”

GM, the world’s biggest automaker has a ‘put’ option agreement with Fiat Auto and also holds a 20 per cent equity stake in the Italian auto-maker. Under the ‘put’ option, Fiat can force GM to buy the other 80 per cent next year.

Analysts and advisers had said Fiat could recoup and raise money by selling its operations in India, China and Brazil to GM.

“It will only result in a single chief,” Montanari commented.

Asked if the ‘put’ option exercised by parent Fiat Auto will be good from the operational perspective of the Indian unit, Montanari said: “The merger won’t be of any operational significance.”

Fiat India, hit by slumping sales ascribed to the parent’s financial problems and lower fuel-economy, had launched the diesel version of Palio, a compact car in the small car segment and Adventure, a station wagon.

“I don’t think there is a mileage problem. Fuel economy depends on individual driving habits and the Palio is a safer and heavier car with higher engine power,” he said.

“We should be happy if we are able to sell around 40,000 units a year... Of these around 12-20 per cent sales should come from the Diesel variant of Palio. What we are doing is: A strategy of better after-sales activity, consolidation of dealer network and streamlining our own internal operations,” he said.

“Around 30 per cent of the dealer network had been changed and the number of dealers would be increased to 78 from the current 67.”

“In the first half of 2003 we will concentrate on marketing Palio while in the second half we will focus on the Sienna and Adventure,” Montanari said.

“We will target the taxi operators. This gives additional sales volumes,” Montanari said adding it won’t affect the Sienna’s brand image.

Asked if the firm would take to the Completely Built Unit (CBU) format to introduce models from its international portfolio, Montanari replied in the negative.

“In the long run, the business-of-scale does not favour CBU imports. We will only concentrate on our current products,” he added.

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