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The Fiat Uno and its colossal failure in India: What happened behind the scenes?

Fiat Uno | Colossal Failure | India | 16th December 2022 | Virtual Wire

 

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A quick summary of Fiat from the perspective of the Indian market would be one of the various missed opportunities and bad business decisions are taken over the years.

With consistent sales losses and a lack of proper product planning, the Italian brand had struggled to keep its head above water and is now history in India. Talking about history, Fiat has had a number of opportunities to turn the tide and get the ball rolling in the Indian market, ones that they eventually failed to capitalise on. The debacle of Fiat Uno remains one of the biggest business disasters to happen in the history of independent India. For starters, the economic liberalisation of 1991 paved the way for a number of international companies to set up shops in India, which they reckoned was one of the last untapped markets in the world. Even before the doors opened, the Italian automaker made it clear what kind of strategy it intended to use in the Indian market.


In 1997, Fiat set up a separate entity for India in partnership with Premier Automobiles Limited (PAL), known as Fiat Automobiles India Private Ltd. Keeping government regulations in check, the partnership ensured that Fiat would have a 51 per cent stake in the company, with the rest of it belonging to Premier. One of the purposes of this partnership was to give then-runaway market leader Maruti Suzuki some stiff competition, with the ambition of even dethroning them from the throne. It was no small feat given that Maruti Suzuki had an enviable market share of nearly 70 per cent at the time, and Fiat expected to have their work cut out for them in terms of formulating a successful product launch strategy. This was to happen with the introduction of the renowned Project 178 "World Car" to the country as the Palio hatchback and the Siena sedan. In addition to this, Fiat had also planned on bringing its global supermini, the Uno, to the game as a cost-effective product aimed mainly at first-time buyers.

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As part of the plan, the Uno was the first product launch from the brand in India and was a very historical one in the context of Indian history. The fact that Fiat was releasing a car after such a long time had piqued the public's interest in how the car would perform when put to the test in the harsh Indian conditions. Prior to the two parties entering into a joint venture, a technical agreement was signed on behalf of importing the Uno as a CKD from the Brazilian market and assembling them in Premier's Kurla facility. The Uno initially received a thunderous response from the Indian public, with the car collecting as many as 2,94,000 bookings within the first few months of its launch. With such a great response received for the car, the situation had pretty much played into the hands of PAL-Fiat, with the partnership getting off to a bright start. There was also a lot of goodwill for the Fiat brand, which had helped Premier collect crores of rupees under its name for some reason. But what followed for Uno and the companies, in particular, was nothing short of a nightmare, as a number of problems arose spanning different topics of view.


The workers at their production facility in Kurla went on strike owing to the non-payment of dues, which had initially caused a delay in the production schedule of the Uno. During the meantime, Premier had been earning tonnes of money in black, ranging from booking amounts to the image and branding rights of the Fiat brand in India. With the subsequent delay came the large-scale cancellation of bookings for the car by its potential customers. As a result, the company was permitted to refund the booking amounts within 60 days of the customer's cancellation under its own terms and conditions. This was also to be done with an interest rate ranging from 9 per cent to 12 per cent. But the company had defaulted on the same, leading to customers taking action by approaching consumer courts and filing criminal cases against the company and its promoters. If that was not enough, both Premier and Fiat had to meet in court again, with French automaker Peugeot also in the mix. Peugeot had filed a lawsuit against Premier for approaching Fiat for a business partnership of their own despite inking an agreement with them as stated in the contract signed by both parties. Hence, Premier was in business with two automakers with two different contracts in place and was found guilty of doing so.

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All the drama surrounding the companies in question had sidelined the Uno and the future projects, leading to the car falling off the radar of buyers. The arrival of competition in the form of the Hyundai Santro, Daewoo Matiz and Tata Indica had pushed the Uno further back in the pecking order, with demand for the car being kept alive only by a few timely price cuts and the availability of a diesel engine as an option. In the end, the Uno was made as a barebones model to compete against the Maruti 800, with the Palio taking its place as the premium offering from the Fiat stable. This was a dramatic fall from grace for a product that had initially promised so much and delivered so little. In fact, the mishandling of the Uno by Fiat's Indian arm was in stark contrast to what was happening in Brazil, where the car was one of the best-selling vehicles and still attains cult status even after all these years.

With pretty much the same product on sale in India, one has to wonder where it all went wrong for Uno and what could have been done to prevent the debacle. Hence, better decisions and proper planning were the need of the hour for Fiat India to dictate the success of the Uno and build a brand here, one that they had never managed to construct after the grand reception that the car had initially received.

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