Stellantis sees India as profitable auto market amid challenges in China, Russia By Reuters

By Aditi Shah

NEW DELHI (Reuters) – Stellantis chief Carlos Tavares expects India to be a worthwhile market and a much bigger development alternative than the carmaker beforehand anticipated because it faces challenges in international locations corresponding to China and Russia.

India, the place Stellantis sells its Jeep and Citroen manufacturers, makes up a fraction of the carmaker’s world gross sales however Tavares mentioned he expects revenues within the South Asian nation to greater than double by 2030 and working revenue margins to be in double-digits inside the subsequent couple of years.

Western carmakers for years have struggled to generate profits in India, a market dominated by Asia’s Suzuki Motor and Hyundai Motor with their small, low-cost automobiles.

“Being worthwhile in India is feasible in case you do issues the India method,” Tavares mentioned at a digital media roundtable late on Tuesday.

This, based on him, consists of sourcing elements domestically and vertically integrating the availability chain to maintain prices low, and engineering automobiles domestically with options Indian shoppers need and are keen to pay for. Stellantis, shaped in the beginning of 2021 by way of the merger of France’s PSA with Fiat Chrysler (FCA), in March outlined a brand new group technique to spice up revenues and maintain revenue margins excessive because it steps up efforts to roll out electrical automobiles (EVs).

The concentrate on India comes at a time when the world’s fourth-largest carmaker is dealing with headwinds in China, the place it’s reshuffling its technique amid lagging gross sales and powerful competitors, and in Russia, the place it has suspended manufacturing as a result of Ukraine warfare. “The challenges … are giving India a much bigger alternative, even greater than up to now,” Tavares mentioned.

On the coronary heart of its India plan is Stellantis’ good automobile platform program which it has developed within the nation to permit it to launch small, gasoline-powered automobiles of lower than 4 metres in size, Tavares mentioned. Small automobiles are taxed at decrease charges, making them extra reasonably priced.

It should additionally launch electrical variations of its small automobiles beginning subsequent yr, he mentioned.

Small automobiles have been an Achilles heel for many world automakers in India and making an attempt to compete in that house has been a race to the underside for the likes of Ford and Common Motors (NYSE:), resulting in their eventual exit.

However Tavares is assured of Stellantis’ strategy — earlier than constructing automobiles, it has strengthened its provide chain.

Stellantis manufactures its powertrains and gearboxes domestically and sources greater than 90% of the car’s contents in India. Its engine plant in southern India is a worldwide benchmark on price and high quality and it plans to do the identical at its two automobile vegetation, the place it manufactures Jeep SUVs and Citroen automobiles, Tavares mentioned.

“We now have been working for a few years now on localisation, vertical integration in India, to benefit from the good frugality of India,” he mentioned.

Stellantis has invested over one billion euros ($1.05 billion) in its Indian operations since 2015.

The carmaker additionally needs to supply cells and batteries from India every time the availability chain develops, Tavares mentioned, including that this might be the one solution to construct reasonably priced EVs.

Stellantis has lower than 1% of India’s automobile market of three million models a yr however Tavares mentioned he isn’t chasing volumes in India or globally.

“We consider the world is altering and in some circumstances being too massive could also be a penalty,” he mentioned.

($1 = 0.9490 euros)