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GM-Maruti-Fiat

The broad contours of a three-way automotive alliance that everyone is trying to figure out.

GM's Aditya Vij

With the Indian government handing the steering of Maruti Udyog Ltd to Suzuki Motor Corp, Indian auto circles have been abuzz with how the global affiliations of Suzuki with Fiat and General Motors would play a role in creating a behemoth here in India.

Globally, GM has a 20-per cent stake in Suzuki, and another 20-per cent stake in Fiat of Italy. In India, this could spell a three-way alliance. But perhaps the real beneficiaries would be Fiat and GM, neither of which has a wide after-sales and dealer network in the country. At least nothing compared to what Maruti has. Distribution and after-sales synergies are obvious. And the rest?

Maruti Udyog, on its part, could benefit from the alliance by sourcing diesel engines from both Fiat and GM. Other kinds of technological cooperation could help too – maybe even throw up a ‘trans-continental’ product a la Ford Mondeo, which boasts of design inputs from across the world. What Maruti needs is some snazz to go after the top-end consumer, who’s long outgrown the brand.

Fiat seems rather keen on the alliance, as says M P Bianchi, Chairman and Managing Director, Fiat India Pvt Ltd, “Talks are underway to identify the main focus areas of this effort, which are likely to be in the areas of product sharing, cross branding and sourcing of engines.” However, he adds that “it is still too early to comment on the implications as the main framework and blueprint for the co-operation is being put in place at present.”

Globally, Fiat has been financially in a tight position, of late. It has borrowed Euro 3 billion (around Rs 150 crore) to refinance its debt. In India, Fiat is reported to have accumulated losses of Rs 1,280 crore from its domestic operations. For the year ended December 31, 2001, Fiat India posted a net loss of Rs 316 crore. “We have a lot of expertise in the area of diesel engines,” stresses Bianchi.

While Fiat has found a winner in its Palio, in India, some consumers are still worried about the group’s global future (the Daewoo experience has made consumers cautious). This alliance could allay some of these worries, and get the brand the sales it deserves.

The American player GM can benefit, too. For some strange reason, it has been proceeding rather cautiously in India (selling just Opel products), so a three-way deal could perhaps help it speed up its market-conquest plans. Or at least get more ‘mass market’ in the way it approaches the Indian market.

“We're exploring a number of different options with both Fiat and Suzuki,” is all that Rob Leggat, spokesperson for GM’s global operations, has to say. However, he is quick to add: “At this stage, talks are not finalized, and it would be premature to discuss specific programs or timetables.” Whatever is agreed upon, a coming together of Maruti, GM and Fiat will put worry-lines on the foreheads of all their rivals – particularly Ford and Hyundai, the two players that have proved the savviest marketers in recent years.

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