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Tim O'Brien | Jul, 02 2015 | 2 Comments

India is tracking to become the third largest automobile market behind China and the USA (source: IHS Automotive), and, by 2020, the fourth largest producer of cars globally.

Those are points not lost on Fiat Chrysler Chief Executive, Sergio Marchionne.

And that’s why, this week, Fiat Chrysler has announced it will invest AUD$366million in a joint venture with Tata Motors to begin Jeep production there in 2017.

Marchionne’s announced ‘turnaround plan’ for Fiat Chrysler, and the tough sales targets the company has set for itself, sees “local production (of FCA products) in major markets” as a key to achieving its goals for growth.

This venture is, as Marchionne said, an “important step as we continue to expand the availability of Jeep products around the world”.

But it won’t be an easy ride. The Indian market has proven a tough nut to crack for European brands – Fiat sells barely a thousand cars a month there and Renault and Peugeot have, until recently, struggled to get a foothold.

But the iconic Jeep brand is perhaps a better fit – after all, one in five of India’s 2.6 million annual passenger vehicle sales are SUVS.

FCA also perhaps has the right joint venture partner in Tata.

For FCA, the Jeep brand is a key part of its global ambitions. And it makes sense: those four letters ‘J-E-E-P’ are recognised the world over for tough, capable dual-purpose cars.

There is a reservoir of goodwill sitting behind them – enduring from that first Bantam BRC of the second world war, the eponymous “GP”, or “General Purpose” car – that is a marketer’s dream (or should be), and a perfect fit in an emerging economy with vast areas of challenging roads and rugged terrain.

For its part, Renault is re-configuring its pitch for this rapidly developing market.

It is aiming for a five percent market share. Leading its charge is the Kwid hatchback (below) – perhaps more part-wagon, part-SUV – which will be manufactured in Chennai and which it hopes to export to other emerging budget-buyer markets in Africa and Asia.

Speaking at the unveiling of the Kwid in May - at around US$5000, one of the world's cheapest cars - Renault-Nissan CEO Carlos Ghosn said, “This is a car for conquest in India.”

The Kwid goes on sale in India in September.

Mr Ghosn also said that Renault planned to increase its investment in production facilities there to expand from its annual 400,000 production capacity.

But, while Renault has been doing reasonably well with its Duster SUV, it lags well behind market leaders Maruti/Suzuki, Hyundai and Honda.

Jeep, however, will not be at the budget end of this intensely budget-focused market. The Jeep brand’s progress there and whether the timing is right with this FCA venture with Tata will be interesting to watch.

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