India a big growth opportunity: Stellantis

In a statement Carlos Tavares, the CEO of automaker Stellantis said he expects India to be a profitable market and a big growth opportunity.

Stellantis, which sells its Citroen and Jeep brands in India, expects revenues from India to more than double by 2030; it also expects its operating profit margins to be in the double-digits within the next couple of years.

Carmakers have struggled to make money in the Indian market, which is  dominated by Asia’s Suzuki Motor, Mahindra Group, Tata Motors, and Hyundai Motor. 

“Being profitable in India is possible if you do things the India way,” said Tavares at a virtual media roundtable.

The secret lies in sourcing parts locally, vertically integrating the supply chain to keep costs down and engineering cars locally with features Indian consumers want and are willing to pay for.

Stellantis’ India focus comes at a time when it is facing strong headwinds in China, where it is reshuffling its strategy midst lagging sales and strong competition; the carmaker also had to suspend its production in Russia because of Western sanctions following the war Ukraine.

“The challenges … are giving India a bigger opportunity, even bigger than in the past,” said Tavares.

At the heart of its India plan is Stellantis’ smart car platform program which it has developed in the country to allow it to launch small, gasoline-powered cars of less than four metres in length, Tavares said. Small cars are taxed at lower rates, making them more affordable.

It will also launch electric versions of its small cars starting next year, said Tavares.

Stellantis manufactures its powertrains and gearboxes locally and sources more than 90% of the vehicle’s contents in India. Its engine plant in southern India is a global benchmark on cost and quality and it plans to do the same at its two car plants, where it manufactures Jeep SUVs and Citroen cars, said Tavares.

He went on to add, “We have been working for many years now on localisation, vertical integration in India, to enjoy the smart frugality of India”.

Since 2015, Stellantis has invested more than $1.05 billion (1 billion euros) in its Indian operations. It also wants to source cells and batteries from India whenever the supply chain develops in order to build affordable EVs.

Stellantis has less than 1% of India’s car market of 3 million units a year but Tavares said he is not chasing volumes in India or globally.

“We believe the world is changing and in some cases being too big may be a penalty,” said Tavares.

($1 = 0.9490 euros)

Categories: Creativity, Entrepreneurship, HR & Organization, Strategy

Tags: , , , , , , , , , , , , , , , , , , , , , , ,

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: