Stellantis sees India as profitable car market amid challenges in China, Russia

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NEW DELHI — Carlos Tavares, head of Stellantis, expects India to be a profitable market and greater growth opportunity than the automaker previously anticipated as it faces challenges in countries such as China and Russia.

India, where Stellantis sells its Jeep and Citroën brands, accounts for a fraction of the automaker’s global sales, but Tavares said he expects revenues in the South Asian country to more than double by 2030 and operating profit margins over the next few years.

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Western automakers have struggled for years to make money in India, a market dominated by the Asian Suzuki Motor and Hyundai Motor with their small, cheap cars.

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

This, he says, includes sourcing parts locally and vertically integrating the supply chain to keep costs down, and building cars locally with features that Indian consumers want and want to pay for.

Stellaantis, formed in early 2021 through the merger of France’s PSA with Fiat Chrysler (FCA), outlined a new group strategy in March to increase revenues and keep profit margins high by ramping up efforts to sell electric vehicles (EVs). to roll out.

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The focus on India comes at a time when the world’s fourth-largest automaker is facing headwinds in China, where it is rearranging its strategy amid sluggish sales and stiff competition, and in Russia, where it has halted production amid the war in Ukraine.

“The challenges … give India a greater opportunity, even greater than in the past,” Tavares said.

At the heart of the India plan is Stellantis’ smart car platform program that it has developed in the country to enable it to launch small, gasoline-powered cars under four meters 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, he said.

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Small cars have been an Achilles heel for most global automakers in India and trying to compete in that space was a race to the bottom for companies like Ford and General Motors, leading to their eventual exit.

But Tavares is confident in Stellaantis’ approach – before it built cars, it strengthened its supply chain.

Stellantis manufactures its powertrains and gearboxes locally and obtains over 90% of the vehicle’s content in India. The engine plant in South India is a global benchmark in terms of cost and quality, and it plans to do the same at its two auto plants, where it produces Jeep SUVs and Citroën cars, Tavares said.

“We have been working on localization, vertical integration in India for many years, to enjoy the smart austerity of India,” he said.

Stellantis has invested more than a billion euros ($1.05 billion) in its Indian operations since 2015.

The automaker also wants to source cells and batteries from India as the supply chain develops, Tavares said, adding that it would be the only way to build affordable EVs.

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

“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 Coghill)

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Amanda Peterson: Amanda is an economist turned blogger who provides readers with an in-depth look at macroeconomic trends and their impact on businesses.

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