NEW DELHI (NewsRise) -- Fiat Chrysler Automobiles plans to start exports of an India-made passenger vehicle to Japan for the first time, a major step as the Indian unit seeks to revive its flagging fortunes.
Local sales and exports of the latest Jeep Compass sport-utility vehicle will begin in the third quarter of this year, Kevin Flynn, president and managing director of Fiat Chrysler's Indian unit, said in an interview.
"For us, selling a made-in-India car to Japanese customers with their penchant for quality will be a big achievement," Flynn said.
He described Japan as a major market and key to demand for the Compass model.
Besides Japan, the India-made Compass will be exported to other right-hand drive markets, including the U.K., Australia and South Africa.
The move will be a milestone for India's car industry, which is aiming to turn into a global exports hub.
For Fiat Chrysler, exports are crucial as it tries to resuscitate the Indian business. According to the Society of Indian Automobile Manufacturers, the local unit exported 135 cars in the year that ended March 31. Domestically, the company sold 5,665 Fiat cars in the period, a decline of 32% year-on-year, giving it just a 0.2% share of the market. Fiat Chrysler ranked 14th of 17 carmakers by sales in the country.
The Compass will be the first SUV and the priciest vehicle yet to be exported from India to Japan, the world's third-largest car market after China and the U.S. The only India-made car that is currently exported to Japan is the Baleno hatchback, made by Maruti Suzuki India.
The Compass will be offered with the option of a 1.4-liter gasoline engine or a 2.0-liter diesel engine, said Flynn.
Fiat Chrysler, the Netherlands-based parent, sold more than 20,000 vehicles in Japan last year, a record, according to the company. It aims to grow that number to 30,000 units by 2019. Sales of the Jeep brand of SUVs totaled 9,388 units in Japan last year, up 32%.
Automakers such as Ford Motor, Hyundai Motor, General Motors, Maruti Suzuki India, Nissan Motor and Volkswagen have been increasing exports of India-made cars, thanks largely to lower production costs. A total of 758,830 cars were exported from India last financial year, a growth of 16%.
India is one of four global production hubs for the latest generation Jeep Compass. The others are Mexico, Brazil and China. The South Asian country is also the sole manufacturing base for all right-hand drive markets.
Fiat Chrysler has invested $280 million to build the new Compass at its plant in India. The factory, an equal joint venture with Tata Motors at Ranjangaon in the western state of Maharashtra, has the capacity to produce up to 160,000 cars and 350,000 engines a year.
In India, Fiat Chrysler is banking on the Compass and other new models under the Fiat and Jeep brands to propel its weak sales. The Jeep brand entered the Indian market last year with the imported Grand Cherokee and Wrangler SUV models.
The automaker will also introduce its global parts, service and customer service brand - Mopar - in India later this year as part of a strategy to revamp the sales and service network and transform Fiat Chrysler's image, said Flynn.
The Mopar brand will initially be introduced in 10 cities, he said, adding that the company is also revamping its sales and service outlets.
Flynn said a "significant" portion of parts for the Compass will be sourced from Indian vendors, allowing it to be offered at a competitive price in the domestic market. The vehicle is expected to compete with products from Hyundai Motor, Ford Motor, Honda Motor, Isuzu Motors and Renault S.A.
SUV sales have been the bright spot in the country's passenger vehicle market. Sales in the segment jumped 30% in the last financial year to 761,997 units, well above a 3.9% rise in car sales to 2.1 million units.
Fiat currently sells the Punto hatchback, the Linea sedan, and the high-performance Abarth car brand in India.
"We can attribute the current situation (of weak sales) to aging products. We have done a full evaluation and made a decision to add products faster," Flynn said. He declined to identify the new vehicles Fiat Chrysler plans to introduce in India.
--By Santanu Choudhury