One and a half decades after parting ways, it seems that Premier and Fiat will again join hands for the latter's new product, Rio. If the deal is signed, the Italian auto maker will develop a 1.3 litre multijet diesel engine for Premier's compact Sports Utility Vehicle (SUV). The same engine complies with the BS IV norms and powers two of the most successful passenger vehicles in India, Maruti Suzuki Swift and Tata Vista.
The Indian car maker, which is best known for its iconic Padmini, may outsource 6000-8000 engines for Rio from Fiat. According to Chairman and Managing Director of Premier, Maitreya Doshi, "We have been in talks with Fiat for quite some time. There are a couple of vehicles in Italy right now which are being tested; once the technical integration is ready, we will enter into a component supply agreement with Fiat."
Rajeev Kapoor, Managing Director, Fiat India also agreed that the two companies were in talks. He also said, “The engine is under final calibration, once it's over, it will take another two to three months to be used. Though it is not a big volume, it will definitely offer additional revenues to Fiat India." If Fiat bags the deal, it will be able to stem the losses, especially in the wake of the poor sales figures of its own passengers in the booming Indian auto market.
Premier has not been able to take Rio to Tier I cities due to the lack of a BS IV compliant engine, which has affected its sales volumes. Currently, the sales figures of this compact SUV stand at just 2000 units since its launch in 2009. However, the Indian manufacturer has been working on improving the NVH (Noise Vibration & Harshness) quotient of the car, refurbishing the interiors and fine-tuning the engine.
Along with Fiat, Premier has also worked with AVL, an engine designing company, to manufacture a 1.2 litre BS IV petrol engine. Considering the extremely competitive SUV market, where more than 3-4 lakh units are sold annually, Premier is eyeing a modest 8000-9000, with aspirations of carving a niche for itself.
Doshi commented, "Unlike other established automakers that have running businesses, for us, it is a restart after a decade. We have decided to let capacity chase demand, rather than create capacity and then wait for demand." The company also aims to increase its dealership network to 100 in the next 12-18 months, up from the existing 50 dealerships in the country.
This new millennium Premier-Fiat tie-up may end becoming a crucial move for the Indian car maker, which should face new competition from Mahindra's upcoming compact Xylo. Doshi said, "Our engineering & machine tool business is growing at a good pace and even if I manage to touch a volume of 8,000 to 9,000 in a year, our turnover can triple to almost Rs. 1,000 crores in the next few years."
Presently, the auto wing of Premier contributes only marginally towards the company, which is valued at Rs. 300 crores and earns primarily through its heavy engineering and machine tools division.
