Corporate Restructuring

FIAT: GLORY OF 50 YEARS
Submitted by:
MR. SUYOG HAGIR
Towards partial fulfillment of BMS course 2009-2010
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BHAVANS COLLEGE OF MANAGEMENT STUDIES Andheri (west), MUMBAI DECLARATION

I, Mr. Suyog Hagir of Bhavans College of Management Studies of BMS (Sem 5) have completed the project on FIAT: GLORY OF 50 YEARS in year 2009-2010.
The information submitted is true and original to the best of my knowledge.
Date:
signature of the student
Place: Mumbai
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CERTIFICATE
I Prof. Riddi Sharma, hereby certify that Mr. Suyog Hagir, of Bhavans College of Management Studies has completed the project on FIAT: GLORY OF 50 YEARS in the academic year 2009-2010.
__________________ Signature of Project coordinator
__________________ Signature of Principal Dr. Mrs V.I. Katchi
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ACKNOWLEDGEMENT
During The Perseverance Of This Project, I Was Supported By Different People, Whose Names If Not Mentioned Would Be Inconsiderate On My Part. I would like to Extend My Sincere Gratitude and Appreciation to Prof. Riddi Sharma Who Initiated Me into the Study of FIAT: GLORY OF 50 YEARS
It Has Indeed Been A Great Experience Working Under Her During The Course Of The Project For Her Invaluable Advice And Guidance Provided Through Out This Project. I Also Owe My Sincere Gratitude To Dr. Mrs V.I.Katchi Principal Of Our College.
I Would Also Like To Thank The Following People Who Through Their Experience Have Enlightened Me On The Practical Aspects Of This Subject Without Whom The Study Would Not Have Been Carried Out Successfully.
1. Prof. Riddi Sharma.
2. Concord Motors & Its Executive Staff. 3. Family & Friends. I Would Also Like To Give My Sincere Gratitude To All My College Librarian Staff Because Of Whom I Am Able To Complete My Dream Project.
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INDEX
SR.NO
1.1 1.2 1.3 1.4 1.5 2.1 2.2 2.3 2.4 3.1 3.2 3.3 3.4 3.5 3.6 3.7
TOPIC
Executive Summery Purpose Of Study Objectives Scope Limitation Intro : FIAT INTERNATIONAL Evolution History Presence All Over The World Industry Glimpse Segment & Market Share FIAL FIAT Value Chain FIAT Pest Analysis FIAT Porters Analysis SWOT Analysis RESEARCH Findings & Analysis Recommendations & Drivers For Strategic Solutions BIBLIOGRAPHY
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4.6 5.1 5.2
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CHAPTER 1
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EXECUTIVE SUMMARY
Fiat Auto is a catastrophe and the group as a whole lacks strategic direction and is again becoming too complex to manage effectively."
- Jurgen Pieper, Motor Analyst, Metzler Bank (Frankfurt), in April 2002.
FIAT was one of the founders of the European motor industry. Right from the outset the company pursued two growth strategies that became the cornerstones for its later development: a strong international vocation and an innovative spirit, as seen in the technological quality of its products and the advanced production and organizational solutions it adopted. But in more than one century- activity, FIAT has meant much more than cars alone. In fact the company interpreted its vocation for the motoring world in an original manner, expressed by its commitment to all forms of mobility for people and goods: from cars to trucks, agricultural tractors, marine engines, aeronautical engines and, in more recent years, space launchers. Today Fiat is well known brand established into the mind set of the consumer and is amongst the most trusted brand too. Besides, producing cars Fiat has revitalized it self according to the Indian consumers and their needs. Fiat has truly being hero during its glorious time and in true sense is the one of the most reputed brand. In the era of competition and stiff cost cutting; FIAT would have definitely faced those problems as other auto brands have but none the less it stays in the Indian market forever.
PURPOSE OF THE STUDY

The auto sector is very vast, still nascent as compare to developed countries and fastest growing sector. The purpose of the study is to understand/study brand FIAT and its long years up and downs journey into the Indian auto market.
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OBJECTIVES
To study strategies applied brand FIAT into Indian market. Understand various facets relating to FIAT and its models Study brand FIAT and strategies used by them. Understand reasons for FIAT failure and an attempt for its recover Through primary research, understand the position of brand FIAT vis--vis other auto brand into the same sector.
SCOPE
The study of whole universe is not possible. Auto sector has very vast scope and cannot be defies. It is fastest growing sector, however recent disease of recession has also affected this sector. The report studies only the facets relating to brand FIAT thus the report scope is narrow and specific.
LIMITATION
The report limits itself to the study of brand FIAT and do not discuss the other brand. This is so as the project does to become vague and is specific to its study. Primary research methodology too focuses on brand FIAT and other auto brands into the segment.
REPORT FLOW
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CHAPTER 2
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2.1 INTRODUCTION: FIAT INTERNATIONAL

Fiat, an acronym for Fabbrica Italiana Automobili Torino, is an Italian automobile manufacturer, engine manufacturer, financial and industrial group based in Turin in the Piedmont region. Fiat-based cars are constructed all around the world, with the largest number produced outside Italy being built in Brazil. It also has factories in Argentina and Poland. Fiat has a long history of licensing its products to other countries regardless of local political or cultural persuasion. Joint venture operations are found in Italy, France, Turkey, India, Serbia and Russia. Fiat Group is the largest vehicle manufacturer in Italy, with a range of cars starting from small Fiat city cars to sports cars made by Ferrari, and vans and trucks ranging from the Ducato to Iveco commercial trucks. Besides Fiat Group Automobiles S.p.A, the Fiat Group automotive companies include Ferrari S.p.A., Iveco S.p.A. and Maserati S.p.A. The Fiat Group Automobiles S.p.A. companies include: Abarth & C. S.p.A., Alfa Romeo Automobiles S.p.A., Fiat Automobiles S.p.A., Fiat Professional and Lancia Automobiles S.p.A.. Ferrari S.p.A. is 85% owned by the Fiat Group, but is run autonomously. The European Car of the Year award, Europe's premier automotive trophy for the past 40 years, has been awarded twelve times to the Fiat Group, more than any other manufacturer. Most recently the Fiat Nuova 500 has won the award for European Car of the Year 2008. Fiat models which have won European Car of the Year: 1967: Fiat 124 1970: Fiat 128 1972: Fiat 127 1980: Lancia Delta 1984: Fiat Uno 1989: Fiat Tipo 1995: Fiat Punto
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1996: Fiat Bravo/Brava 1998: Alfa Romeo 156 2001: Alfa Romeo 147 2004: Fiat Panda 2008: Fiat 500
In 2003, the Group restructured its core business area by focusing on manufacturing and service activities of the traditional motor vehicle sector. Today, the company has made up of nine Operating Sectors: Automobiles, Agricultural and Construction Equipment, Commercial Vehicles, Ferrari and Maserati, Metallurgical Products, Automotive Components, Production Systems, Publishing and Communications and Services. This new structure of the Group, also with Business Solutions (service company of the group) and ITEDI (Publishing & Communications division of FIAT Group), ensures a total focus on the automotive industry.
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2.2 EVOLUTION
Fiat 3 CV (1899)
Giovanni Agnelli founded Fiat in 1899 with several investors and led the company until his death in 1945, while Vittorio Valletta administered the day-to-day activities of the company. Its first car the 3 CV (of which only eight copies were built, all bodied by Alessio of Turin) strongly resembled contemporary Benz, and had a 697 cc (42.5 cu in) boxer twin engine. In 1903, Fiat produced its first truck. In 1908, the first Fiat was exported to the US. That same year, the first Fiat aircraft engine was produced. Also around the same time, Fiat taxis became somewhat popular in Europe. By 1910, Fiat was the largest automotive company in Italy a position it has retained since. That same year, a plant licensed to produce Fiats in Poughkeepsie, NY, made its first car. This was before the introduction of Ford's assembly line in 1913. Owning a Fiat at that time was a sign of distinction. A Fiat sold in the U.S. cost between $3,600 and $8,600, compared to US$825 the Model T in 1908. Upon the entry of the U.S. into World War I in 1917, the factory was shut down as U.S. regulations became too burdensome. At the same time, Fiat had to devote all of its factories to supplying the Allies with aircraft, engines, machine guns, trucks, and
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ambulances. After the war, Fiat introduced its first tractor, the 702. By the early 1920s, Fiat had a market share in Italy of 80%.
Corso Dante plant
Lingotto factory (1928)
Mirafiori plant
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FIAT: GLORY OF 50 YEARS Lingotto factory (today)
In 1921, workers seized Fiat's plants and hoisted the red flag of communism over them. Agnelli responded by quitting the company. However, the Italian Socialist Party and its ally organization, the General Confederation of Labor, in an effort to effect a compromise with the centrist parties ordered the occupation ended. In 1922, Fiat began to build the famous Lingotto car factory the largest in Europe up to that time which opened in 1923. It was the first Fiat factory to use assembly lines; by 1925, Fiat controlled 87% of the Italian car market. In 1928, with the 509, Fiat included insurance in the purchase price. Fiat made military machinery and vehicles during World War II for the Army and Regia Aeronautica and later for the Germans. Fiat made obsolete fighter aircraft like the biplane CR.42, which was one of the most common Italian aircraft, along with SavoiaMarchettis, as well as light tanks (obsolete compared to their German and Soviet counterparts) and armored vehicles. The best Fiat aircraft was the G.55 fighter, which arrived too late and in too limited numbers. In 1945 the year Mussolini was overthrown the Italian Committee of National Liberation removed the Agnelli family from leadership roles in Fiat because of its ties to Mussolini's government. These were not returned until 1963, when Giovanni's grandson, Gianni , took over as general manager until 1966, as chairman until 1996. 2.2.1 GIANNI AGNELLI Among the younger Agnelli's first steps after gaining control of Fiat was a massive reorganization of the company management, which had previously been highly centralized, with almost no provision for the delegation of authority and decision-making power. Such a system had worked effectively enough in the past but lacked the responsiveness and flexibility made necessary by Fiat's steady expansion and the growth of its international operations in the 1960s. The company was reorganized on a productline basis, with two main product groups one for passenger cars, the other for trucks and tractors and a number of semi-independent division and subsidiaries. Top management, freed from responsibility for day-by-day operations of the company, was
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able to devote its efforts to more far-reaching goals. In 1967, Fiat made its first acquisition when it purchased Autobianchi; with sales amounting to $1.7 billion, it outstripped Volkswagen, its main European competitor, and in 1968 produced some 1,750,000 vehicles while its sales volume climbed to $2.1 billion. According to Newsweek in 1968, Fiat was "the most dynamic automaker in Europe...[and] may come closest to challenging the worldwide supremacy of Detroit." Then, in 1969, it purchased controlling interests in Ferrari and Lancia. At the time, Fiat was a conglomerate, owning Alitalia, toll highways, a typewriter and office machine manufacturer, electronics and electrical equipment firms, a paint company, a civil engineering firm, and an international construction company. Following up on an agreement Valletta had made with Soviet officials in 1966, Agnelli constructed the AvtoVAZ plant in the new city of Togliattigrad on the Volga. This began operation in 1970, producing a local version of the Fiat 124 as the Lada. On his initiative, Fiat automobile and truck plants were also constructed in industrial centers of Yugoslavia, Poland, Bulgaria, and Romania. In 1979, the company became a holding company when it spun off its various businesses into autonomous companies, one of them being Fiat Auto. That same year, sales reached an all-time high in the United States, corresponding to the Iranian Oil Crisis. However, when gas prices fell again after 1981, Americans began purchasing sport utility vehicles, minivans, and pickup trucks in larger numbers (marking a departure from their past preference for large cars). Also, Japanese automakers had been taking an ever-larger share of the car market, increasing at more than half a percent a year. Consequently, in 1984, Fiat and Lancia withdrew from the United States market. In 1989, it did the same in the Australian market, although it remained in New Zealand.
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2.3 HISTORY
The history of Fiat began many years ago, at the dawn of Italian industrialisation, in which the company has always played a leading role. From that moment on, the Fiat brand spread throughout the world and developed extensively. Today, following a change in corporate culture and mentality, the name Fiat is still fraught with meaning, and not only on account of the cars we produce - cars with attractive styling and exciting engines, cars that are accessible and improve the quality of everyday life - but also on account of our heritage and tradition: let's take a stroll back in time through the brand's history. 2.3.1 From 1899 - 1911 Fiat was founded On 11 July 1899 at Palazzo Bricherasio, the company charter of "Societ Anonima Fabbrica Italiana Automobili Torino" was signed. Among the members of the Board of Directors, Giovanni Agnelli stood out in the group of investors and won recognition for his determination and strategic vision. In 1902 he became the Managing Director of the company. The first factory was opened The first factory was opened in 1900 in Corso Dante. 150 workers were employed there and produced 24 cars, among which the 3/12 HP, not yet fitted with reverse gear. The Fiat logo, oval on a blue background and designed by Biscaretti, was adopted in 1904. First wins in the races The first Car Tour of Italy saw 9 Fiat cars arrive at the finish line. The first real competition car, a 24 HP driven by Vincenzo Lancia, won the Sassi-Superga uphill race in 1902. Giovanni Agnelli himself ran in the Second Tour of Italy and set a record in an 8 HP.
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The company renovates its production In a few years Fiat completely renovated its production: the cars were fitted with electrical accumulators for the first time. The cardan transmission, a FIAT patent, began to be used. Fiat cars continued to shine in the competitions and set several records. 2.3.2 From 1912 - 1925 The Lingotto factory In 1916 the construction of Lingotto started under the direction of Giacomo Matt Trucco. The Factory, the largest in Europe, occupied five floors and had a futuristic test track on the roof. It soon became the emblem of the Italian automotive industry and was completed in 1922. Fiat expands to new sectors In the meantime Fiat expanded its activities to the steel industry, the railway, electricity and public transportation lines. Fiat Lubrificanti was established and the first Italian subsidiary was opened in Russia. When the War broke out, company production was almost entirely aimed at supplying the army Post-war crisis and recovery After the war there were years of transformation and crisis but as early as 1923 growth resumed thanks to an effective cost-curbing policy. Giovanni Agnelli became the CEO. Numerous car models were launched, among which the 509, the first car with four seats. Development of the Company The policy adopted by the company was to develop industrial mass production. Mass production was launched as the only way to curb the prohibitive prices of cars. During a phase of increasing consumption, Sava, a holding company was set up to promote instalment plans for purchasing cars. IFI, Istituto Finanziario Industriale, was also established at that time.
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Services for employees These years were also significant for the internal growth of Fiat. Numerous organizations for employees were established: from health care to specialized schools to sports clubs. 2.3.3 From 1926 - 1938 Falling back on the domestic market During the years of Mussolini's autarchic policy, Fiat too had to rescale its plans for international presence and concentrate on the domestic market. In the Thirties trucks and commercial vehicles underwent considerable technological development and at the same time the aviation and railway sectors grew. The new cars In 1934 and 1936 two cars came out and were destined to an enormous public: the "Balilla", also called "Tariffa minima" due to its low consumption of fuel, and the "Topolino", the smallest utilitarian car in the world, which was produced until 1955. The Mirafiori factory In 1937 works started for the great Mirafiori plant, which introduced the most advanced principles of industrial organisation and confirmed company focus on mass production. 2.3.4 From 1939 - 1951 Second World War During the war years there was a drastic reduction in the production of cars, while the construction of commercial vehicles increased considerably. Changes in the top management In 1945 Senator Giovanni Agnelli died and the presidency of the Fiat was assumed by Vittorio Valletta. Post-war recovery
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In 1948 the reconstruction of the plants destroyed during the war was completed, also thanks to the American subsidies from the Marshall plan. Profits started to grow and the number of employees also increased. Commitment to research With two new cars such as the 500 and the 1400, Fiat confirmed its commitment to research and innovation. For the first time the heating and ventilation systems were installed in mass production. Research continued on marine and aircraft engines: in 1951 the first Italian jet aircraft came into being, the G80. 2.3.5 From 1952 - 1964 Diesel In 1953 the first Fiat diesel engined vehicle was presented, the 1400 diesel. The beginning of the economic boom In 1958 production started growing enormously, both for automobiles and farm machinery. Mirafiori doubled its factories and Fiat set up new manufacturing plants abroad as well. In Italy this was the period of the economic boom and the auto sector was the 'driving force' of the economy. The new models In 1955 the Fiat 600 was born, a big utilitarian car with a rear mounted engine. In 1957 the New 500 was presented and in 1960 it began to be produced in the 'Giardinetta' version, a precursor of the Station Wagon style. Moreover, these were the years of Fiat 1800, then 1300 and 1500. 2.3.6 From 1965 - 1977 The economic boom and social unrest Growth continued in exports as well as production: the trend showed an increase from one car every 96 inhabitants to one every 28. In the meantime Fiat boosted its presence in
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southern Italy by setting up numerous factories there. There was also an increase in trade union conflicts: in 1969 total hours on strike reached 15 million. The new cars After Fiat 850, a new popular utilitarian car, the 127, made its debut in 1971. Toward automation In 1966 Giovanni Agnelli, the grandson of the founder, became President of the company. In those years there was a trend toward increased automation of the manufacturing processes to cope with the oil crisis and to continue on the road of technological innovation. 2.3.7 From 1978 - 1990 The Robogate system In 1978 the "Robogate" system was created, the new flexible robotized system for assembling the bodywork. It was the road to innovation and the automation of production. The holding configuration In 1979 the auto sector was set up as an independent company: Fiat Auto S.p.A., which included the brands Fiat, Lancia, Autobianchi, Abarth, Ferrari. The Ferrari brand was acquired at 50% initially, a share that later rose to 87%. In 1984 the company also took over Alfa Romeo (following by Maserati acquisition - a prestigious sports car brand - in 1993). Independent companies Fiat's numerous operations were set up as independent companies. Alongside Fiat Auto the following companies were founded: Fiat Ferroviaria, Fiat Avio, Fiat Trattori, Fiat Engineering, Comau, Teksid, Magneti Marelli. The Fiat Panda and the Fiat Uno
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In 1980 a new utilitarian was styled by Giugiaro for Fiat and was called Panda. Two years later the car that would become the emblem of Fiat Auto's renewal was born: the Fiat Uno. It featured radical innovations in its electronics, choice of materials and the use of a clean engine: the 1000 Fire. The Fiat Tipo Another successful model appeared in 1989: the Tipo, voted "Car of the year" for its cutting-edge technical solutions. Its production marked a conquest of Fiat technology: production by processing stations. 2.3.8 From 1991 2003 The new cars of the 1990s After the debut of the Fiat Tempra in 1990, the 500 came out in 1991. Two years later, in 1993, it was the moment of Fiat Punto (named "Car of the Year" in 1995) and Fiat Coup, with bodywork designed by Pininfarina and Centro Stile Fiat Other popular cars With Fiat Ulysse, which came out in 1994, the company made its entry in a sector that was progressively expanding: the SUV. 1995 saw the debut of the Barchetta, the Fiat Bravo and Brava, followed the next year by Fiat Marea and Marea WE, and in 1997 Fiat Palio. Changes at the top and a new registered office In 1996 Giovanni Agnelli became the Honorary President of the Fiat Group and Cesare Romiti took the office of CEO. In 1997 the parent company left its premises in Corso Marconi and moved to the Palazzina Fiat of Lingotto, which in the meantime had been converted into a Trade Fair and Convention Complex. The last born in 1990s and the first born of the new century 1998 was the year of Fiat Seicento, ideal for city driving, and the Multipla, characterised by flexible use and uncommon versatility. Two years later, at the Paris Motor Show, Fiat
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Dobl was presented: a young car, informal, that also served the functions of a commercial vehicle. Meanwhile, in Brazil, the three world cars were launched: the Palio, Palio Weekend and Siena. In 2001 Fiat Stilo was launched, characterized by a new design, with sophisticated technology and numerous deluxe options; the following year Fiat Multipla, New Fiat Ulysse and Fiat Stilo Multi Wagon were restyled. In 2003 - the year that saw the sad death of Giovanni Agnelli, who had been at the helm of Fiat for almost half a century - the new Punto was marketed (exactly 10 years after the model was first launched) with the innovative 1.3 Multijet 16v, and the new Barchetta was restyled inside and out. In the autumn Fiat reclaimed its leading position in the super-compact segment with the new Panda, immediately awarded the prize '2004 Car of the Year'. 2.3.9 From 2004 - 2007 The restyling of the logo on Fiat Idea Fiat Idea was the first MPV created by Fiat but also the first car with the task of communicating the brand's new 'mission': Fiat Idea displayed the round logo, renewed and proposed by Centro Stile Fiat to evoke the emblem designed to celebrate the Company's 100th Anniversary. It was also meant to get across the most significant change in Fiat car design: more attention to high-tech content and intelligent solutions designed to simplify several aspects of daily life in the car Multijet engines Fuel saving and top performing, this engine proved a real success factor on the new Fiat car models. The new system - born of the evolution of the 'Common Rail' principle - is the basis of the new second-generation Fiat engines: the small 1.3 Multijet 16v, the sporty 1.9 Multijet 120 and 150 bhp and the powerful 1.4 90 bhp. Three years of new models The years 2004-2006 were an extremely busy time for the Turin company, which, following a profound change in corporate culture and mentality, focused on a continuous, rapid overhaul of its products, on technological research, on the quality of its designs and on a new, constructive relationship with the customer. During these years, this new
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philosophy gave rise to a series of new models, and some restyling of older models: from the restyling of the Fiat Idea Model Year, Seicento MY and Stilo MY to the new Multipla and the launch of the Panda 4x4, in 2004; 2005 began with the launch of the new Croma, designed by Giugiaro, the new 600 (celebrating its 50th anniversary), and the Grande Punto - beautiful, solid and exciting. 2006 saw the launch of the New Dobl and Sedici, the 4x4xTUTTI for city and off-road driving, and the official car of the 2006 Olympic Winter Games, while the Panda MY 2007 range was extended and overhauled. The debut of the new logo on the Bravo 2007 began with the launch of the Bravo - preceded by the first ever institutional Fiat blog. Bravo is the first car to sport the new Fiat logo as a tangible sign of the company's turnaround. The new Bravo is a successful blend of beauty and substance, destined to become a benchmark for the segment.
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2.4 PRESENCE: ALL AROUND WORLD
2.4.1 Fiat Automveis, Brazil
The 1979 Brazilian Fiat 147 was the first modern car to run on pure hydrous ethanol fuel (E100). Fiat Automveis s.a., a subsidiary of Fiat S.p.A., began making automobiles in Brazil in 1976 beginning with the production of the Fiat 147, the Brazilian version of the Italian Fiat 127, produced until 1986. Launched in July 1979, the 147 was the first mass produced car that run on ethanol as fuel instead of petrol. The performance slightly increased and fuel consumption was 30% higher but the cost of the alcohol was a quarter of the gasoline because, at that time, petrol had become expensive as a consequence of the 1979 oil crisis. This version was nicknamed cachacinha (little cachaa) because it had the smell of that Brazilian drink.
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2.4.2 Fiat Argentina Fiat has been present in Argentina since the beginning of 20th century. There was a Fiat manufacturing plant in Crdoba at least as far back as 1954 when Fiat entered into a joint venture with two local companies for the manufacture of tractors. In 1959 the construction of a car plant in Caseros was approved, and 1960 saw the production there of the first Argentinian produced Fiat passenger car, a Fiat 600. By 1978 a car manufacturing facility was well established in Crdoba, producing Fiat 128s as well as two models which from the Italian perspective belonged in earlier decades, the 125 and the 600R. The current day automobile manufacturing started with a new factory opened in Crdoba on December 20 1996. From April 1997 the Siena and Palio models production started. 2.4.3 Zastava, Serbia Its first enterprise came in 1955, when it agreed a deal with Yugoslav carmaker Zastava to assemble Fiats for Eastern Europe. The first cars to be produced by Zastava were its versions of the Fiat 1300 and Fiat 1400. By 1970, Zastava was producing parts for the newer Fiat 124 and Fiat 125 models, although these cars were actually assembled in Poland. Zastavas were not popular outside of Eastern Europe before the 1980s, although they were exported to the United States under the Yugo brand as long ago as 1973. 2.4.4 Polski Fiat/FSO (Poland) Fiat automobiles have been made in Poland since 1920. In 1932, the Polskie Zakady Inynieryjne (Polish Engineering Works, PZIn) started the production of Fiat 508, produced until 1939 also as a military vehicle. In 1936 the licence was extended to include the Fiat 518 model. In 1965, the Polish communist government signed a deal with Fiat to produce selected Fiat models in Poland at the FSO factory in Warsaw that had been built in 1951. Production of the new car the Polski Fiat 125p - began in 1967.
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2.4.5 AutoVAZ Lada (Soviet Union/Russia) In 1966, Fiat helped U.S.S.R. state industries build a new car factory (AvtoVAZ) on the banks of the Volga river. A planned city called Tolyatti was developed around the factory, which started producing a "people's car" similar to the Volkswagen Beetle and Citron 2CV of Germany and France. The new Soviet car, called the Lada, however, was a more spacious offering, in four-door saloon and five-door estate variants. Fiat installed British-built machine tools supplied by Herbert-BSA of Birmingham for the manufacture of many Lada parts. The 124's design was mechanically upgraded to survive treacherous Russian driving conditions and extremely cold winters. Imports to Western Europe, Canada, and some third world countries began, and by the early 1980s, the cars began to sell fairly well thanks largely to their low asking price. This car was upgraded to become the Lada Riva (marketing name in some markets) in 1980. 2.4.6 Bulgaria 1967-1971 produced Pirin-Fiat in Lovech, Bulgaria. 2.4.7 Tofa, Turkey Tofa is joint venture owned by Fiat SpA and Ko Holding (37.8% Fiat Group Automobiles, 37.8% Koc and 24.3% others). The Fiat 124 was produced under licence by Tofa as the Tofa Murat. This was replaced by a version of the Fiat 131, known as the Tofa ahin. Today the Fiat Linea car is amongst those manufactured by the Fiat-Tofas joint venture in Turkey, and the company has 12.1% of the Turkish car market as of 2007. 2.4.8 SEAT, Spain In Spain, SEAT was set up with Fiat assistance, producing Fiat models under its own brand name until 1981, when Fiat withdrew its support. However, production of the Fiatbased models continued, with the final Fiat-based SEATnot finishing until 1996. By this
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stage, SEAT had become part of German manufacturer Volkswagen after several years of ownership by the Spanish government. 2.4.9 South Africa In South Africa, the Fiat Uno was assembled under licence by Nissan, which marketed it through its dealerships as the Uno, without Fiat branding. 2.4.10 Ethiopia The Fiat 131, known as the Holland Car DOCC. 2.4.11 Helwan, Egypt Following the Egyptian Revolution of 1952, President Gamal Abdel Nasser ordered the EGID (General Intelligence Agent) to establish a state owned automobile company. Nasr was founded in 1960 in Helwan, Egypt. It began producing some Fiat based models, but later on produced the Tofa ahin under license by Tofa. Until today, both the Fiat 128 and the ahin are in production in Egypt. 2.4.12 Premier Automobiles, India Premier Automobiles Limited is a Mumbai-based manufacturer of vehicles founded in 1944. In 1951, the company began producing versions of the Fiat 500 for the Indian market. This was followed by the Fiat 1100 in 1954. In 1973, the Premier name was used on its vehicles for the first time, the Premier President, based on the Fiat 1100 as Premier Padmini. In 1984, they launched the Fiat 124-based Premier 118 and 138D models. Fiat India Automobiles Private Limited (FIAPL) is a joint venture between Fiat and Tata Motors. It was founded in 1997. Fiat builds the Palio Stile and Palio Stile Multijet in India and imports its Fiat 500 into India from Italy, whereas Fiat has many cars under its hood planned for India like the internationally acclaimed Linea, Grande Punto and Bravo, of which the Linea was released in January 2009
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and the Punto in June 2009. Bravo will follow in mid 2009. The Fiat plant is situated in Ranjangaon near Pune in Maharashtra and also manufactures the Tata Indica. 2.4.13 Sri Lanka In 1964-65, the Ceylon Transport Board contemplated production of buses in Sri Lanka in collaboration with FIAT. However, with the change of Government in 1965, the CTB opted for a deal with British Leyland. In 1973, entrepreneur Upali Wijewardena's Upali Motor Company began assembly of the so-called 'Upali-FIAT' 128. However, production ended with the introduction of the open-market economy in 1978. 2.4.14 North Korea The North Korean car manufacturer and dealer Pyeonghwa Motors assembles two Fiat models under licence since 2002: Hwiparam - based on the Fiat Siena, Ppeokkugi - based on the Fiat Dobl.
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CHAPTER 3
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3.1 INDUSTRY GLIMPSE

The automobile industry today is the most lucrative industry. Due to the increase in disposable income in both rural and urban sector and easy finance being provided by all the financial institutes, the passenger car sales have increased at the rate of 38% per annum in June 2005-06 over the corresponding period in the pervious year. Further competition is heating up in the sector with a host of new players coming in and other like Porsche, Bentley, Audi, and BMW all set to venture in the Indian markets. One factor that could help the companies in the marketing of their product is by knowing and creating a personality for their brands. The automobile industry today is the most lucrative industry. Due to the increase in disposable income in both rural and urban sector and easy finance being provided by all the financial institutes, the passenger car sales have increased at the rate of 25% per annum in June 2007-08 over the corresponding period in the previous year. Further competition is heating up in the sector with a host of new players coming in and others like Porches, Bentley, Audi, and BMW all set to venture in Indian markets. One factor that could help the companies in the marketing of their products is buying Behavior of the consumers. Indians have emerged as avid car enthusiasts sporting their prized possessions as status symbols and speed machines. Foreign car companies have discovered the Indian consumer as well as the R & D potential in the Indian technical fraternity and are setting up manufacturing plants right and left across the country at lower costs. The Indian automobile industry is currently experiencing an unprecedented boom in demand for all types of vehicles. This boom has been triggered primarily by two factors: (1) increase in disposable incomes and standards of living of middle class Indian families estimated to be as many as four million in number; and
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(2) The Indian government's liberalization measures such as relaxation of the foreign exchange and equity regulations, reduction of tariffs on imports, and banking liberalization that has fueled financing-driven purchases. Industry observers predict that passenger vehicle sales will triple in five years to about one million, and as the market grows and customer's purchasing abilities rise, there will be greater demand for higher-end models which currently constitute only a tiny fraction of the market. These trends have encouraged many multinational automakers from Japan, U. S. A., and Europe to enter the Indian market mainly through joint ventures with Indian firms. India is increasingly becoming a global automotive hub both for the vehicles and component industry. India is fast integrating itself into the world economy and open to international automotive companies, who are increasingly investing in India. The Indian automotive and component industry is looking to increase the quality of production from existing levels, to develop new products and to increase exports. In the long run India is well set to become a key market for automotive and component manufacturers in terms of local demand and as a base for export. Additionally, companies such as GM, Daimler Chrysler, Toyota, Delphi and MICO/Bosch are utilizing Indias well developed IT / software capabilities and have set up R&D hubs here for their global operations
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3.2 SEGMENT & MARKET SHARE

Category Economy segment (upto Rs 0.25mn) Mid-size segment (Rs 0.25-0.45 mn) Luxury car segment (Rs 0.45- 1mn) Models Maruti Omni, Maruti 800 etc. Fiat Uno, Hyundai Santro, tata Indica, Maruti Alto etc. Tata Indigo, Honda City, Mitsibushi Lancer, Ford Ikon, Opel Astra, Hyundai Super luxury segment (above Rs 1mn) Segment Economy Mid-size and luxury Accent & others Mercedes Benz & other imported models Market Share (%) 90.2 9.8
Source: SIAM/ Auto Car India
Hyundai 18%
Tata 13%
Fiat 4%
Ford 3% HM 2%
Maruti 55%
Honda Toyota GM 2% 0.3% Daimler Chrysler MitsubishiSkoda 1% 0.2% 1% 1%
3.3 FIAL
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Fiat India Automobiles Limited is a 50-50 Industrial Joint Venture between Fiat Group Automobiles S. p. A., (Fiat) and Tata Motors Limited (Tata) originally incorporated on January 02, 1997. The company presently employs about 600 employees and is located at Ranjangaon in the Pune District of Maharashtra. The definitive agreement of the Joint Venture was signed on October 19th 2007. Fiat, which holds a 50% stake in the Company, also owns and controls five internationally renowned brands:- Fiat Automobiles, Alfa Romeo Automobiles, Lancia Automobiles, Abarth and Fiat Light Commercial Vehicles, the makers of renowned cars such as the Ferrari, Maserati, Alfa Romeo and Lancia besides the Fiat branded cars. Tata Motors Limited, the other partner to the Joint Venture, is the largest automobile company in India, with revenues of Rs. 32,426 crores (USD 7.2 billion) in 2006-07. It is the leader in commercial vehicles in every segment and the second largest in the passenger vehicles market with winning products in the compact, mid-size car and utility vehicle segments. The company is the worlds fifth largest medium and heavy commercial vehicle manufacturer and the worlds second largest medium and heavy bus manufacturer The state-of -the-art facility at Ranjangaon, have an installed capacity to produce 100,000 cars and 200,000 engines, besides aggregates and components. This facility is currently manufacturing the Palio Stile 1.1 and 1.6 models, as well as premium Fiat cars such as the Grande Punto and Linea. The facility also manufactures Fiats successful 1.3 litre Multijet diesel engines and 1.2 & 1.4 litre Fire gasoline engine. Apart from Fiat cars, the facility also produce Tata passenger and next generation cars with investment exceeding 650 Million.
3.4 FIAT VALUE CHAIN

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The strength of FIAT lies in its own production, as the automotive industry generates economic activity in other sectors the large importance of inputs from other sectors in the production of motor vehicles. In fact, the main impact of an increase in the final demand is visible in the where the production of automotive products increases. As a consequence, this has an impact on other sectors: steel production, the metal working industry, high-tech manufacturing (mechanical and technical engineering, electronics, and so forth) chemical products and rubber. There are also strong links between car production and several service sectors, including R&D and IT services, financial services, transport and trade. These links through the value chain demonstrate the importance of the automotive sector as an engine for growth and employment.
3.5 FIAT PEST ANALYSIS
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3.5.1 Political According to the Kyoto_ protocol, all the countries must reduce greenhouse gas emissions by 8% compared to 1990 levels in the period of 20082012; more than 100 countries, including the EU and its member states, have deposited their instruments of ratification. However, some large countries have not ratified the protocol yet. As far as environmental restrictions regard, the strictest market is the EU. Considering the distribution in the automotive industry, FIAT needs to carry out the distribution of their products by themselves but they organize it through a dense network of authorized dealers whose function is to resell the products to the final consumer. The Block Exemption for fiat allows network of service and exclusive dealerships Rising oil prices has also affected FIAT as petrol and cars are complementary products. However, the demand is price elastic and the good is perceived as prime necessity. (The demand tends to be less elastic in countries where the revenue per capita is lower). 3.5.2 Economic factors Growing Chinese market and Chinese make products which are much more cheaper than any other products would definitely had affected FIAT. Thus FIAT has to focus on the low production cost in order to compete Chinese make cars. 3.5.3 Technology FIAT has to keep up with the global technology improvement and enhancement. The improvised technology in the automobiles sector would help to increase car efficiency, reduce emissions, help produce the best at cheaper cost. 3.5.4 Social The ever-changing consumer demands and taste has to be well updated by FIAT product designs. IT should well suits the consumer needs and provide the full satisfaction.
3.6 FIAT PORTERS ANALYSIS

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3.6.1 Competitive rivalry within the industry
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There is an intense rivalry between firms in the automotive industry because of the concentration both on the national and international markets. FIAT pursued advantage over its rivals is product differentiation by improving features and implementing manufacturer process innovations. For instance, FIAT began to look seriously at cutting components costs and outsourcing more contracts in the 90s. By understanding the need for smaller supplier networks and just-in-time delivery, FIAT began to concentrate on larger tier-one suppliers who would absorb much of the R&D costs necessary to develop components. In a constantly changing market, there is a strong competition coming from abroad (in particular, from Japan and Korea) that has obtained part of the FIAT's domestic market share. At the same time, investments abroad can become a significant factor in corporate internationalization strategies by exploiting comparative advantages in foreign countries, especially in labor costs. Fiat could do profit by cutting costs and through alliances with other car makers such as Ford and the Indian group Tata Motor. 3.6.2 Supplier power Suppliers provide raw materials, different components and the labor required by the producing industry. In the FIAT value chain analysis we will discuss about the rules on which supply is based. In this section, we want to mention the double situation referring to suppliers' power. Suppliers of FIAT have been divided into two categories. The first group involves the Italian component suppliers which rely on the FIAT Group for their business. In this group there are firms, such as Magneti Marelli and Teksid that are subsidiaries of Fiat and economically dependent on it. In the second category there are hundreds of smaller firms that are usually dependent on Fiat but in a more indirect way. In recent years, FIAT has tried to expand its production abroad and so it has fostered the possibility of international expansion of many Italian suppliers as well.
3.6.3 Threat of new entrants
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The possibility that a new firm can enter the market influences competition. However, barriers to entry could also exist. These barriers can reduce the rate of entry of new firms and maintain a level of profit for all the other firms in the industry. Fiat is pursuing a strategy by expanding its portfolio. In fact, firms can choose to merge in foreign markets like India, and thus creating new relationships with other companies. Firms can choose to merge in order to avoid barriers to entry in new markets. Almost all the major car companies, such as Renault and Nissan, Toyota and Honda merged and many of them find themselves in a very complex cross-ownership network. The pattern is to emerge in the global economy which is characterized by a very small number of large players. Furthermore, FIAT has to be able to manage brand identity in order to avoid the threat of new entrants. 3.6.4 Power of costumers The power of costumers is the impact that buyers have on the producing industry. In the automotive industry, many firms such as Volkswagen, Ford, GM, and BMW are groups that have developed multi-brand marketing strategies in order to serve different customers in different markets. All of them are now working on new distribution channel strategies as part of their product differentiation on the market. The FIAT marketing strategy revealed to be weaker than that of many competitors and this condition was made worse by the trend that took place in the last ten years. Even style-conscious Italians started looking elsewhere for their wheels and, as a consequence, the share of FIAT on the Italian market decreased considerably. In the international markets, FIAT lost many costumers because some FIAT models were perceived as unreliable and because spare parts were difficult to get and often very expensive. Now, the new Fiat Punto seems to be the only ray of hope for the company to foster the FIAT Auto in doing profit. As Giulio Salomone recently pointed out, the priority is to improve the buyer power and in order to reach this goal FIAT has introduced a new dealer training: We and our dealers must improve the customer experience, give better customer satisfaction and we now have the right models for them to sell. 3.6.5 Threat of substitutes
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It comes from products inside the industry. In the automotive industry, the consequence can be price competition. Although FIAT has launched the new Punto last year (September), it has to face tougher competition when rivals such as Peugeot and Opel will launch their own city car models. The situation raises much more concern if we consider the fact that FIAT models popularity and sometimes even availability is weak elsewhere in Europe (excluded Italy) and as a consequence, it is difficult for the company to become a strong competitor and substitute for the other car makers in the industry. The crisis of FIAT Auto is also due to the inefficient management of the brand. The success of FIAT depends on having the ability to give the company a serious position on the market on the base of tangible assets and creating different categories of cars such that buyers can find the input to compare various models of different brands.
3.7 SWOT ANALYSIS
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3.7.1 Strength A brand with a strong historical value Evocative power of the FIAT golden years (50s and 60s). Some models, such as 500, are evocative of the glorious age of the Italian style. Made in Italy. Great names and designers, such as Giorgetto Giugiaro. The new top management would be more open minded than the previous era of the Agnelli brothers. Presence of FIAT Plants abroad The other two brands, Alfa Romeo and Lancia, which are strong and evocative Good at producing small cars Qualified people FIAT has qualified personnel in its research centres. Expertise in CRF and style center
3.7.2 Weakness Management culture inefficient For instance top management takes too seriously the concept of mature market and so focuses on services, assistance and price cuts (through promotions) more than on innovation and brand asset management. The inefficiency of the management is underlined by its inability to give the FIAT a serious position on the market. What people perceive is a high ratio quality-price and this is an important evidence and result of an inefficient management. A culture far from customers and dealers, those who represent FIAT on the market Lack of sensitivity It is noticed that FIAT seems not to be able to understand what happens around. The problem is the lack of the important ability of understanding the symptoms that anticipate problems. The consequence is the abrupt and disastrous reaction of the company that tries to survive the crisis by firing people, selling off, projecting reductions of costs, and so forth. Another important consequence is that this kind of behaviour leads FIAT to be always out of step if compared with its competitors and makes FIAT blind in front of the huge changes that are taking place all around.
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The supremacy of Engineering.the attention is focused on creating a product
which tries to be perfect from engineering perspective thus it is not consumer oriented. Marketing is weak._Marketing is not considered a relevant source in order to understand customers needs and market trends. It is considered as a way through which sell something which is far from customers expectations. A weak brand identity: nobody knows what FIAT stands for. Economices of scale: FIAT tries to implement economies of scale, although it has not the financial power to sustain them. In addition, this brings the company to focus on quantity rather than quality and innovation. Strong dependency of manufacturers on suppliers, the lack of integration between them, the lack of cooperation and commitment to achieve the same goals, the lack of recognition in the brand, and so forthhave negative implications. First, the impoverishment of the internal know-how and competencies; second, lower quality; third, no long-run savings. No defined segments The style is anonymous. After the old model of panda and uno, new models have
not been able to make mark. FIAT be recognizable. This is of huge concern because it means that FIAT is not able to exploit in the right way the great potentials that are offered by the Centro Stile. Never pioneer in introducing new models No demand advantage in the home market. It is appropriate to consider a brand
perspective since the brands are primary channels through which customers recognize manufacturers. We have to underline that there is a strong affiliation of French and German car buyers towards brands that originate in their respective home market. This suggests an atmosphere of trust into cars that are domestically built and designed. For the Italian brands, and above all for of FIAT, this link is weaker. Italian car buyers are less focused on the domestic brand but keep a strong interest in other European brands.
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3.7.3 Opportunities Third world countries. In this countries cars tends to be simpler thus they require From Vertical Integration to Virtual Integration in the design, manufacture and less money. marketing of cars has historically been defined by the efficiency and internal capabilities of vertically integrated Original Equipment Manufactures (OEMs) and a few key suppliers.Automotive companies made huge investments automating and reengineering design, manufacturing, and marketing processes in pursuit of lower costs and greater efficiency. The strategy: Implementing a collaborative commerce strategy requires more than linking data and synchronizing information. Companies need to be prepared to first define the overall approach to collaborative commerce and ensure it align to strategic objectives. The strategy should guide the prioritization of the portfolio of initiatives and roadmaps. Everything is based on creating value through collaboration, while maintaining flexibility for future growth and requirements. The Chinese automotive market is growing very rapidly. Market size, terms of investments and an improving infrastructure provide the basis for foreign automotive companies. The potential of the Chinese market attracts not only manufacturers but also the whole supplier industry. Trend towards free trade. As the world trade organisation expands its membership and activities are under way for a new round of trade liberalisation, Europe as a major player in automotive trade should be among the prime beneficiaries from the opening of new markets and the strengthening of existing relationships. As a major player in international markets, Europe has established stable channels that constitute a competitive advantage. 3.7.4 Threats Impact of regulation on the value chain flexibility. While changes in taste and technology require constant reconfigurations in the automotive value chain, the regulatory framework may make this task more difficult and costly.
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Over-capacities. In recent years European, North America and Japanese markets
see a sluggish development in demand. On the other hand, a rapid capacity build-up in emerging Asian markets and Eastern European markets is taking place. Both developments may induce world over-capacity and stimulate price competition. Due to high labour costs and lagging labour productivity EU producers are not very well equipped for price competition in the standard car segment. This may induce additional pressures for consolidation of the industry e.g. via mergers. Groundbreaking innovations challenge existing excellence in production. The European manufacturers distinguish themselves with an excellent position in different markets. However, the threat of missing groundbreaking innovations is still on the agenda. Success can breed failure, as manufacturers are in danger of being locked in traditional products and technologies and often ignore revolutionising developments outside their traditional fields of expertise. Some of those major breakthroughs are on the horizon in the automotive sector. They have potential to make conventional value chain configurations obsolete and subsequently open up opportunities for new competitors. Major innovation competition from Japanese producers. competitive position in global vehicle production and they are strong competitors of European and American companies. In some fields like the hybrid engine they lead the market significantly ahead of other manufacturers.
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CHAPTER 4
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4.1 RESEARCH OBJECTIVES The research objectives for the project undertaken can be defined as follows: To determine the demographic variables of the customers Examine the customer perception about the FIAT brands.
4.2 RESEARCH SCOPE Research is limited towards the understanding towards FIAT brands in. Also it analyze consumer attitudes towards purchase automobiles
4.3 SAMPLE SIZE
100 respondents
4.4 RESEARCH CONDITION
The owners of FIAT brand

4.5 RESEARCH LIMITATION Area is being restricted to Mumbai due time and financial constraint. As project flows goes on; only auto brands particularly to economic segment are being only considered.
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4.6 FINDINGS & ANALYSIS Q1. Why you bought your present car? Please rank from the highest order of preference 1. Increase in disposable income 2. Better safety at roads 3. Family needs 4. Increase in family size 5. Suits your lifestyle and personality
Motives For buying a car
40
35
39
30
25
20
23
Series1
15
17
10
12
5
Increase in Better safety Family needs Increase in Suits your disposable at roads family size lifestyle and income personality
Motives
As per the analysis shows, increase in disposable income seems to be the most important reason for buying a car. This trend is reflected in the growth of the Per capita Disposable income and consequently the growth of the Indian automobile industry especially in the B and C segment cars. Similarly, the growing family needs
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like working partners, increasing family size, status, etc. add to the motives of buying a car. Q2. You decided to buy a car brand because of (rate best 3 factors from 1 to 3 in order of your preference) 1. Affordable price 2. Technical superiority over competition 3. Comfort 4. Manufacturers image 5. Value for money 6. Safety 7. After sale services
Product Specific Reasons for Buying a Car
2 10
32 Afforable prices Technical superiority Comfort Manufacturer's image Value for money Safety After sale services
28
12
Indian market is still the hard nut to crack for most of the automobile manufacturers. Though the Indian car industry is among the fastest growing car markets of the world still the Indian psyche is too complex for the manufacturers to understand. The most important reason for buying a car when it comes to B and C segment cars seems to be value for money. 32% of the respondents suggested that affordable prices are the most
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important factor while purchasing a car. This is the reason for sticking to a particular segment till the next substantial rise in the personal disposable income. This reason is followed by Value for money where the customers look for the best product, best services and best repute all bundled in one with the best deal they can strike. This explains the reason for the stagnant or sudden growth in sale of B and C segment cars just before budget and near occasions like Diwali.
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Q3. Please rate your FIAT car in terms of understated Interior Design features on a scale of 1 to 5 where 1 2 3 4 5 Highly Dissatisfied Dissatisfied Neutral Satisfied Highly Satisfied 1 2 3 4 5
Interior Type Seats design Leg Room Dash Board Interior Colour Music System Adjustable Front seat Headrest
Level of satisfaction
Interiors for Segment B cars

3 1 3 1 3 1 3 3 1 4 4 4 4 3 3 3 4 3
Adjustable Front Seat Headrest Music System Interior Colour Dash Board Leg Room Seat Design
100%
3 1
80%
4 60%
3 40% 4 3 20% 3 0% 4 4 4
PALIO
PALIO GRADE lINEA UNO STILE PUNTO
FIAT 500
STILE MULTIJET
Cars
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Interiors play a very important role in deciding the sale of a car. More plush, comfortable and exotic the interiors are more are the chances of its being popular among the customers. For this reason manufacturers spend billions of dollars every year on R&D to continuously improve the interiors of their cars. Seats, leg room, dash board, armrests etc are few of the options which count for the interiors. As the analysis show Stile multijet substantially high w.r.t. its counterparts on the account of music system installed. Similarly, Palio stile races far ahead as far as leg room is concerned. However, UNO fares badly on this front. Overall, almost all cars get a mixed response in this segment as far as the interiors are concerned. As one can see most of the respondents are quite happy with the interiors of their respective cars. However, one striking point observed here are that almost every car fares neutral on the adjustable front seat headset.
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Q4. Please rate your existing car in terms of understated Safety features on a scale of 1 to 5 Safety Parameters Crossbar under Dashboard Air Bags Anti Lock Breaking System Aerodynamic Shape Intensity of front lights 1 2 3 4 5
Customer Satisfaction on the Safety Parameter

100% 90% 80% 3 70% 60% 50% 3 40% 30% 20% 10% 0% 3 3 3 1 1 1 3 4 1 3 1 1 3 3 4 4 3 4 4 5 Intensity of front light Aerodynamic Shape ABS Air Bags 3 4 Crossbar under Dashboard 3 3 4 5 4 4 4
PALIOI
PALIO STILE LIENA
GRADE UNO PUNTO
500
STILE MULTIJET
Safety Parameters of Different cars
As can be noted Linea and Grade punto fight neck to neck on almost every front, with Grade punto marginally better in features like crossbars under the dashboard and Anti Brake systems. Most of the cars in this segment fare relatively similar and very close to each other on most of the fronts. As one can see most of the respondents are quite happy with the safety parameters of their respective cars. However, one striking point observed here are that almost every car fares neutral on the safety parameters.
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Q5. Please rate your existing car in terms of following parameters Parameter 1 2 3 Fuel Consumption Mileage ( Km/ltr) Pick Up Stability at higher speed Top speed
Customer Satisfaction Level ( %age)
Customer Satisfaction Level on the Fuel Efficiency
100% 90% 80% 70% 3 60% 50% 3
3 4 4 4 5 5 Stability at higher speed Pick up 4 Mileage Fuel Consumption 4 4 3 3 4
40% 30% 20%
3 10% 0%
4 3 3 3 3 3
PALIOI
PALIO STILE LIENA
GRADE PUNTO
UNO
500
STILE MULTIJET
Cars' Fuel Efficiency Parameters
The customer choice of the car highly depends upon the performance and maintenance costs of the car. This is the reason why this class of parameter was chosen for this study. And the results show that Palio stile fares the best car in its segment as most fuel efficient car of all. Similarly, Palio stile fares the best on the terms like mileage but it lags behind Palio 500 on pick up front. So this segment shows a mixed bag of response for the Fuel efficiency and mileage parameter. Grade Punto performs consistently on all the parameters and Stile Multijet really well on pick up whereas it fares badly on fuel consumption. Considered this condition for Stile Multijet it should be seen as a red signal
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for the manufacturers so does not end up being like Fiats Palio famous as a car for drinking petrol. Q6. How do you rate the brand image of your car? 1 Very Low
Customer Perception ( Avg)
5 Very High
Brand Image
Series1
5
2
4 3
4 3 3
Palio
Palio stile Liena
Grade punto Car Brands
UNO
500
Stile Multijet
As per the analysis, Palio 500 is car whose brand image is most preferred in the market. On the contrary Palio and UNO share the same platform on the brand image. This can be attributed to the fact that both these cars are relatively new on the block and market takes time to imbibe and give the brand an image.
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Q7. Will you recommend your car to your friends? Yes No

Customer's Ultimate Perception
80
73
70
60
50
Frequency
40
30
27
20
10
Yes
No
Customer Action ( Will you recommend your car to your friends?)
It seems logical that satisfied customers will someday become loyal customers, in other words there is a positive correlation between customer satisfaction scores and customer buying behavior. If a customer rates the car very high in satisfying his or her needs, the car manufacturer should expect more referrals and this is reflected in the analysis that 73% customers say that they will refer their car to their friends even if they move to other segment or other brand.
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Q8. Will you buy your new car in the Same segment , same manufacturer Same segment, different manufacturer Upper segment, same manufacturer Upper segment, different manufacturer
Customer Perception
40 35 30 25
12
Values
20 15 10 5 0 11
C B
7 23 17 17
Same Segment, Same Segment, Upper same different Segment, Same manufacturer manufacturers Manufacturer Customer Actions
Upper Segment, Different Manufacturer
The analysis shows that most people when moving to upper segment will prefer a different manufacturer. And the next striking finding is that the customers will prefer both same and different manufacturers in the B segment cars and there is not much difference in the C segment also. This behavior is complex to understand as this are the customers who have given whopping response for recommending their car to their friends. Its the reason why brand perception is so difficult to understand.
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DEMOGRAPHICS
age group <21 21-35 36-55 >55
17
20
21 42
I surveyed around 100 people who belonged to various age groups. The survey of 4 age groups was done. The four age groups were: Less than 21 years 21 -35 years 36-54 years More than 55 years
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MONTHLY FAMILY INCOME

monthly family income <50,000 50,001-1,00,000 1,00,001-2,00,000 >2,00,001
19 34
19
28
I surveyed around 100 people who belonged to various monthly family income groups. The survey of 4 income groups was done. The four income groups were: Less than 50000 50000 - 1,00,000 1,00,001 2,00,000 More than 2,00,001 Above graphs exhibits the income bracket of the sample size, as evident the majority of the sample is in the income bracket of < 50,000 a month income. Though none of the bracket is highly skewed, this enables the study to be wide and not dependent on a set income class, which was a fortunately desirable result of simple random sampling.
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CHAPTER 5
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5.1 RECOMMENDATIONS & DRIVERS FOR STRATEGIC SOLUTIONS

1. Revaluation of the brand equity relying on the historical valuation of the brand and on the evocative power of the FIAT golden years (50s-60s) in addition FIAT must exploit the evocative brands of Alfa Romeo and Lancia which are focused brands and well recognizable: the first one is a well defined sports car model while lancia remains synonymous of elegance 2. Firstly, FIAT can solve the problem reduced to the absence of the domestic competitive advantage and reached those customers who owned a FIAT car in the golden years. This is important to regain a good reputation and then start a process to develop loyalty and gain new customers. 3. FIAT must focus on style and try to exploit all the potentials of the Style Centre which is characterised by the presence of great designers. This behaviour can help FIAT, not only in the domestic market, but also abroad where the Italian style is deeply appreciated 4. FIAT can also follow the current competitors trend aimed at offering to the market historical models with a completely renewed style, as VW with New Beatle and BMW with Mini did. The revival of old models is based on great historical and evocative value they still have. All this helps to create an Italian product that is instantly recognisable as FIAT. 5. FIAT must match the competencies and know-how of the Engineering and the Style Centre. That is, promoting an efficient and balanced interaction between the team of designers and that of engineers becomes a fundamental factor. This balanced interaction is aimed at comparing the models design and the engineering problems in order to solve and pre-empt problems. If this relationship is well balanced and not characterized by the supremacy of the engineers instructions, it will lead to a final model with a very high level of quality, providing precise data for any changes that
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need to be made. However, high quality is perceived by customers on the base of what they need. How better understand customers needs rather than using in an appropriate way the Marketing competencies? 6. Marketing has always been used by FIAT in the wrong way. Promotions, discounts, special editions (often aimed at selling usually unasked accessories) and so forth have always come before the whole car, that is the model the company was selling. As a consequence, what immediately passed through advertising to the customer was a fragmented perception of the car, to the extent that nobody knows what FIAT stands for. Thus, a turn of the screw is needed! 7. FIAT must implement customer-orientation. This allows FIAT to understand what the real needs of customers are and leave the idea that what is perfect from an engineering perspective must be what the customer wants. Marketing plays a fundamental role in achieving this goal because it is one of the most relevant sources of information about the customer and the market trends. 8. FIAT is the inability to understand what happens all around and this makes FIAT unable to comprehend the symptoms of huge crisis. FIAT has often shown the inability of reacting environmental and internal changes and this is a huge problem if we consider the fact that the automotive industry is deeply unstable und competitive. Marketing can be an important way to monitor competitors and the whole environment but it is not enough. Many analysts have highlighted the negative impact of an outdated top management. The solution is to be found in an updated_ top management, made up of relatively younger people that benefit from both experience and an updated corporate education_(which centres on educating people on learning how to be able to react to changes and pre-empt problems). FIAT can only reap benefits from this new top management that is more flexible, reactive and able to understand the needs of market segments.
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9. Another issue that we have considered is the wrong choice of implementing economies of scale which is mainly due to the presence of FIAT plants abroad. According to our analysis, this kind of strategy has not been profitable for FIAT. Thus, this must be replaced by the implementation of economies of scope that enable to produce some components that fit different models. In the case of FIAT, for instance, the production of the same chassis on which assemble different car models, is fundamental in order to obtain lower costs. As a consequence, these cost savings must be invested in innovation and quality. These economies of scope are important because they allow the company to offer both basic models to the emerging countries customers (and this is also enhanced by the fact that the FIAT brand focuses on smaller cars) that do not ask for e.g. air conditioning, and more accessorized cars for the developed ones. In addition, the implementation of economies of scope solves the problem related to high stock inventories which cause high costs. 10. The FIAT main offering of utility cars is a strength that must be exploited not only in the emerging countries but also in the western ones. We do not have to forget the segment of the price sensitive people, such as the younger generations. 11. The FIAT outsourcing is another issue of concern. FIAT must regain control over the value chain and above all suppliers. The solution must be found in the so-called collaborative commerce or virtual integration that is based on network of suppliers although not belonging directly to FIAT, behave as if they were. This strategy is based on two important aspects: collaboration and flexibility. 12. Finally, we want to stress the important commitment of FIAT in the research and development of environmental-friendly vehicles. The role of FIAT is recognized, not only on a national level, but also on a European one. FIAT must continue in investing in these innovative technologies because the future is oriented in this way.
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5.2 BIBLIOGRAPHY
1. Annual Report, Consolidated and Statutory Financial Statements, at December 31, 2004 - 99TH Fiscal Year. Torino, June 2005 Humphrey, J. & Memedovic, O. (2003). The Global Automotive Industry Value Chain: What Prospects for Upgrading by Developing Countries. Vienna: UNIDO - United Nations Industrial Development Organization. 2. European Commission (2005). EUROPA - Enterprise & Industry - European competitiveness report 2004 - Automotive Industry - extract from the Commission staff working document SEC(2004)1397, Bruxelles : EU 3. Deloitte Research, (2002). C ollaborative Commerce in the Automotive Industry. 4. Detroit: Deloitte & Touche LLP Galgano, A. (2005). Toyota, Perch lindustria Italiana non progredisce, Abbiategrasso (MI): Guerini Associati 5. Kahn, G. & Hawkins, L. GM to Pay FIAT $1.99 Billion To Settle Dispute Over Alliance The Wall Street Journal, Feb 14, 2005, NY:WSJ 6. Kahn, G. & Kenneth, M. Fiat posts profit on asset sales, turnaround auto unit The Wall Street Journal, Jan 31, 2006, NY:WSJ 7. Fiat-Ford, insieme per le piccole. Cos nascer la nuova 500 La Repubblica.it, Nov 7, 2005 Roma: LEspresso Casaroli, C. FIAT: Avanti tutta, senza esitazioni. 8. http://www.omniauto.it/magazine June 21st, 2004 - OmniAuto.it Lojacono, S. La grande auto torna a parlare italiano 9. http://www.omniauto.it/magazine May 29th, 2005 - OmniAuto.it Berta, G. & Ciravegna, L. Una nuova configurazione. Il sistema mondiale dellauto. 10. http://www.torino-internazionale.org Jan, 2005 Torino Internazionale 11. Berta, G. & Ciravegna, L. Una nuova configurazione. Il sistema mondiale dellauto. http://www.torino-internazionale.org Jan, 2005 Torino Internazionale 12. www.fiat.com Jan, 2006 13. www.fiatgroup.com Jan, 2006
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FIAT: GLORY OF 50 YEARS

FIAT: GLORY OF 50 YEARS

Towards partial fulfillment of BMS course 2009-2010

FIAT: GLORY OF 50 YEARS

BHAVANS COLLEGE OF MANAGEMENT STUDIES Andheri (west), MUMBAI DECLARATION

The information submitted is true and original to the best of my knowledge.

signature of the student

FIAT: GLORY OF 50 YEARS

__________________ Signature of Project coordinator

__________________ Signature of Principal Dr. Mrs V.I. Katchi

FIAT: GLORY OF 50 YEARS

FIAT: GLORY OF 50 YEARS

FIAT: GLORY OF 50 YEARS

FIAT: GLORY OF 50 YEARS

PURPOSE OF THE STUDY

FIAT: GLORY OF 50 YEARS

FIAT: GLORY OF 50 YEARS

FIAT: GLORY OF 50 YEARS

2.1 INTRODUCTION: FIAT INTERNATIONAL

FIAT: GLORY OF 50 YEARS

FIAT: GLORY OF 50 YEARS

FIAT: GLORY OF 50 YEARS

Corso Dante plant

Lingotto factory (1928)

FIAT: GLORY OF 50 YEARS Lingotto factory (today)

FIAT: GLORY OF 50 YEARS

FIAT: GLORY OF 50 YEARS

FIAT: GLORY OF 50 YEARS

FIAT: GLORY OF 50 YEARS

FIAT: GLORY OF 50 YEARS

FIAT: GLORY OF 50 YEARS

FIAT: GLORY OF 50 YEARS

FIAT: GLORY OF 50 YEARS

FIAT: GLORY OF 50 YEARS

FIAT: GLORY OF 50 YEARS

2.4 PRESENCE: ALL AROUND WORLD

2.4.1 Fiat Automveis, Brazil

FIAT: GLORY OF 50 YEARS

FIAT: GLORY OF 50 YEARS

FIAT: GLORY OF 50 YEARS

FIAT: GLORY OF 50 YEARS

FIAT: GLORY OF 50 YEARS

FIAT: GLORY OF 50 YEARS

3.1 INDUSTRY GLIMPSE

FIAT: GLORY OF 50 YEARS

FIAT: GLORY OF 50 YEARS

3.2 SEGMENT & MARKET SHARE

Honda Toyota GM 2% 0.3% Daimler Chrysler MitsubishiSkoda 1% 0.2% 1% 1%

FIAT: GLORY OF 50 YEARS

3.4 FIAT VALUE CHAIN

FIAT: GLORY OF 50 YEARS

3.5 FIAT PEST ANALYSIS

FIAT: GLORY OF 50 YEARS

3.6 FIAT PORTERS ANALYSIS

FIAT: GLORY OF 50 YEARS

3.6.1 Competitive rivalry within the industry

FIAT: GLORY OF 50 YEARS

3.6.3 Threat of new entrants

FIAT: GLORY OF 50 YEARS

FIAT: GLORY OF 50 YEARS

3.7 SWOT ANALYSIS

FIAT: GLORY OF 50 YEARS