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Will Jeep storm India despite ‘exorbitant’ price tag? Fiat has fingers crossed

autos Updated: Sep 02, 2016 11:32 IST
Gulshankumar Wankar
Gulshankumar Wankar
Hindustan Times
Highlight Story

FCA India MD and president Kevin Flynn with the Jeep Grand Cherokee and Jeep Wrangler Unlimited . (Photo Coutesy:FCA India)

Finally Jeep has entered India. Not the one from Mahindra & Mahindra. The original one, the American icon about which US President Eisenhower famously said: “America could not have won World War II without it.”

On Tuesday, Jeep drove into India two models— Wrangler and Grand Cherokee. While the Wrangler Unlimited starts at Rs 71.59 lakh, the Grand Cherokee was launched in three variants — the 3 ­litre, 8-­speed Limited priced at Rs 93.64 lakh; the 3­litre Summit at Rs 1.03 crore and the SRT at Rs 1.12 crore (all prices ex-showroom Delhi). All models will have four-wheel-drive as standard.

Jeep India opened sales through only two dealerships in Delhi, Chennai and Ahmedabad, and plans to open up to 10 outlets by December. The Jeep will be stacked against the Jaguar-Land Rovers, the Mercedes-Benz G-class, the Audis and the Porsches in India, all known for their premium luxury.

The talking point after the launch has been not the entry as much as the price tag.

According to London-based market analyst Paul Newton of IHS Markit, the “prohibitively expensive” Jeeps won’t make much impact in the segment, which is in overdrive in India. “Given the rise of SUVs in India, it might work OK for them but the fact is we are forecasting just a handful of sales of these models nationally,” Newton said.

The company expressed helplessness over the price tag. “With the government keeping import duties as high as 180%, you cannot do much with the completely-built-unit (CBU) models,” a FCA spokesperson told HT.

The only way it can lower prices is if volumes justify it.

The importance of being Jeep – in India

India has cherished the “Jeep” since long. Since the 1960s when Rajesh Khanna serenaded Sharmila Tagore from the Willy’s left-hand-drive Jeep, to the 1975 classic Deewar in which Shashi Kapoor sang “Keh du tumhe” for Neetu Singh in a right-hand-drive Mahindra Jeep, the Jeep has evolved into a much plush one that we know today. But the iconic slotted-grille and the engineering under the hood remain pure as original.

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Indians will buy the Jeep for sure, for they were, just like for the Ford Mustang, dying for this one since decades. But the success will be determined by how Fiat Chrysler Automobiles (FCA) plays its next move for this one.

The launch was rightly timed; just weeks after the Supreme Court lifted the ban on registrations of diesel vehicles of 2,000cc or more, earlier this month. The automakers incurred a loss of around Rs 4,000 crore during the eight-month ban, according to Vinod Dasari, the president of Society of Indian Automobile Manufacturers (Siam).

But the success of Jeep in the country will matter to FCA more than to Jeep India itself.

Why Jeep India matters to FCA

Fiat Chrysler Automobiles, the world’s seventh biggest auto-player, has been off road in sales in India. Its 2009 India reshoot with the Punto and Linea was a success, thanks to the fresh Italian styling and new, more powerful engines. But the sales never established Fiat strongly in India, amid cut-throat competition from the more-rooted Maruti Suzuki, Hyundai and Honda.

Since June 2015, Fiat has roughly sold 600 vehicles every month, with a market share of just under 0.3%. Its last big launch in India was the performance brand Abarth, which hasn’t picked up full throttle with the 595 Competizione last August and the Punto Abarth last October.

And at the Jeep launch, Fiat Chrysler India president and MD Kevin Flynn announced a $280 million investment for its Ranjangaon plant “to mobilise our localisation strategy”. But this will not make the Wrangler and the Grand Cherokees cheaper; they will continue to be imported as completely-built-units. New locally-made models would however be substantially less pricy, the company spokesperson told HT.

Analyst Newton explains: “The strategy is clearly to establish a beach head with the halo products and then bring in locally assembled, smaller, more affordable models in the next few years.

“An India-based SUV will give FCA opportunities for export in to other Asian markets,” analyst Newton added.

Other than Wrangler Unlimited and the Grand Cherokees, Jeep is a globally revered brand with models like Cherokee, Compass, Patriot, Renegade and the Wrangler. But as of now, under a heavy price tag and pressure to tick sales charts, the fresh new Jeeps in India have a lot to chase.

The author tweets as @GulshanMWankar