NEW DELHI – Carlos Tavares, head of Stalantis, hopes India will be a lucrative market and a big growth opportunity for carmakers as expected, as it has been challenged in countries like China and Russia.
India, where Stellantis sells its Jeep and Citroen brands, makes up a fraction of the global carmaker’s global sales, but Tavares says he expects revenue in the South Asian country to more than double by 2030 and operating profit margins to double in the near future. For some years.
Western carmakers have been struggling to make money in India for years, a market dominated by Asian Suzuki motors and Hyundai motors with their smaller, cheaper cars.
“India can be profitable if you do things like India,” Tavares told a virtual media roundtable late Tuesday.
According to him, this includes locally sourcing parts and integrating the supply chain vertically to keep costs down and locally engineered vehicles with features that Indian consumers want and are willing to offer.
Stellantis, formed in early 2021 through the merger of France’s PSA with Fiat Chrysler (FCA), outlines a new group strategy to increase revenue in March and keep profit margins high as it increases efforts to roll out electric vehicles (EVs).
The focus on India comes at a time when the world’s fourth-largest carmaker is facing a headache in China, where it is shifting its strategy to lagging behind sales and strong competition, and in Russia, where it has suspended production due to the Ukraine war.
“The challenges are giving India a great opportunity, even bigger than in the past,” Tavares said.
At the heart of its India plan is Stalantis’ smart car platform program, which it has created in the country to allow the launch of small, petrol-powered vehicles less than four meters long, Tavares said. Smaller cars are taxed at a lower rate, which makes them more affordable.
It will also launch an electric version of its small car from next year, he said.
The small car has become an Achilles heel for most of the global automakers in India, and trying to compete in that space has been a downward spiral for the likes of Ford and General Motors, which has led them to exit in the end.
But Tavares is confident about Stellantis’ approach – before building the car, it has strengthened its supply chain.
Stellantis manufactures its powertrains and gearboxes locally and supplies more than 90% of the vehicle components in India. Its engine plant in South India is a global standard of cost and quality and it plans to do the same at its two car plants, where it manufactures Jeep SUVs and Citroen cars, Tavares said.
“We have been working for many years now on localization, vertical integration in India to enjoy India’s smart economy,” he said.
Since 2015, Stalantis has invested one billion euros ($ 1.05 billion) in its Indian operations.
The carmaker wants to source cells and batteries from India whenever the supply chain is created, Tavares said, adding that this would be the only way to create affordable EVs.
Stellantis accounts for less than 1% of India’s car market at 3 million units a year but Tavares says he is not following volumes in India or worldwide.
“We believe the world is changing and in some cases being too big can be a punishment,” he said. (1 = 0.9490 euros)
(Reporting by Aditi Shah; Editing by Kim Kogil)