Stellantis sees India as a profitable auto market amid challenges in China and Russia

By Aditi Shah

NEW DELHI (Reuters) – Stellantis boss Carlos Tavares expects India to be a profitable market and bigger growth opportunity than the carmaker previously expected as it faces challenges in countries such as China and Russia.

India, where Stellantis sells its Jeep and Citroen brands, accounts for a fraction of the automaker’s global sales, but Tavares said he expects revenue in the South Asian nation to more than double by 2030 and profit margins operating figures are in the double digits in the next couple of years.

Western automakers have struggled for years to make money in India, a market dominated by Asia’s Suzuki Motor and Hyundai Motor with their small, low-cost cars.

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

This, he says, includes sourcing parts locally and vertically integrating the supply chain to keep costs down, and designing cars locally with the features Indian consumers want and are willing to pay for. Stellantis, formed in early 2021 through the merger of France’s PSA with Fiat Chrysler (FCA), outlined in March a new group strategy to boost revenues and keep profit margins high as it steps up efforts to launch electric vehicles (EVs).

The focus on India comes at a time when the world’s fourth-largest automaker is facing headwinds in China, where it is reshuffling its strategy amid lagging sales and stiff competition, and in Russia, where it has suspended production. due to the war in Ukraine. “The challenges … are giving India a bigger opportunity, even bigger than in the past,” Tavares said.

At the heart of its plan for India is the Stellantis smart car platform program it has built in the country to enable it to launch small gasoline-powered cars less than four meters long, 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, it said.

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

But Tavares is confident in Stellantis’ approach: Before making cars, it has strengthened its supply chain.

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

“We have been working for many years on localization, vertical integration in India, to enjoy India’s smart frugality,” he said.

Stellantis has invested more than €1 billion ($1.05 billion) in its Indian operations since 2015.

The automaker also wants to source cells and batteries from India as long as the supply chain is developed, Tavares said, adding that this would be the only way to build affordable electric vehicles.

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

“We think the world is changing and in some cases being too big can be a penalty,” he said.

($1 = 0.9490 euros)

(Reporting by Aditi Shah; Editing by Kim Coghill)

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