The Amsterdam-headquartered company plans to drastically expand its addressable market by stretching the price bands of its two brands — Jeep, currently used for premium SUVs, and Citroen, currently used for affordable compact cars.
13 Sep 2024 | 17643 Views | By Ketan Thakkar and Prerna Lidhoo
For half a decade, Stellantis — the maker of Jeep and Citroen — has found itself confined to the fringes of the booming Indian car market, partly due to its focus on profits over volumes. Now, with a new leadership team in place, the group is gearing up to be ...
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For half a decade, Stellantis — the maker of Jeep and Citroen — has found itself confined to the fringes of the booming Indian car market, partly due to its focus on profits over volumes. Now, with a new leadership team in place, the group is gearing up to be a serious player.
The Amsterdam-headquartered company plans to drastically expand its addressable market by stretching the price bands of its two brands — Jeep, currently used for premium SUVs, and Citroen, currently used for affordable compact cars. It will round out its portfolio next year by bringing in models from Chinese EV startup Leapmotor.
The new mid-term India strategy for the company is based on a more active brand and marketing play, including frequent product refreshes and more global models. It stems from one of the key convictions of Shailesh Hazela, the new head for its India business.
“We have learned that the Indian market needs freshness frequently. Unlike the product action seen in 18-36 months in European markets, in India, we need to introduce freshness every six months,” says the newly appointed CEO and MD for Stellantis India in one of his first interviews with the media.
Hazela says Stellantis has all the right assets to execute a much stronger business in the future. The company currently has two factories, one in Ranjangoan on the outskirts of Pune and the other in Tiruvallur in Tamil Nadu. It also has an R&D center in Tamil Nadu, a software hub in Bengaluru, and a digital hub in Hyderabad. Besides catering to the home market, Stellantis uses India as a key export base for gearboxes and engines, capitalising on India’s frugal cost base.
Stellantis India’s capabilities include local engineering, body styling, BIW (body in white), chassis engineering, and E&E (electronics and electrical) integration. It also has a design studio in the country, which fine-tunes designs and concepts with the help of the China studio and the global office.
The Citroen Strategy
Of the two brands, the more affordable one — Citroen — is what the company is banking on to drive the volumes. The brand is known for three key attributes: a comfortable ride, superior suspension, and ample interior space.
However, despite their attractive prices, Citroen models have struggled to break into the consumer psyche in India.
The brand has been in India for over four years with several mainstream offerings, but has seen sub-optimal volumes of less than 1,000 units per month. In India, the cars are often seen as under-equipped in terms of features and technology.
“We learned that there are two types of features,” says Hazela. “One is something that the customer values, and the other is one that the customer desires. We must definitely deliver value, but we also need to have a roadmap for desire through constant upgrades. Features like a sunroof and ventilated seats are much beyond value, and they fulfill desire.”
Hazela is therefore pushing engineers in India to bridge the feature gap by delivering accessible solutions based on the company’s three technological pillars — STLA Autodrive, STLA Brain, and STLA Smart Cockpit — given that a significant part of the work on these platforms is happening in India. “Instead of moving from goal post 1 to 2, can the local engineers deliver a 1.2 solution relevant to India while remaining cost-effective? That is how we are bringing frugality and Indianness – so that we don;t have to resort to big shifts,” he points out.
Some of the lessons have already been turned into action. To counter the perception of being seen as under-equipped in features, Citroen launched multiple upgrades of the C3 and C3 Aircross in India, including interior and feature upgrades, within just a couple of years of their launch.
The updated models are based on the company's modular Smart Car or C Cubed platform designed specifically for emerging markets like India. The company also recently launched an SUV Coupe, Basalt, on the same platform.
Stellantis is considering even more products based on the C Cubed platform, but they will not be introduced in India alone. According to Hazela, they will have a global role, especially in the ASEAN region. Citroen could also bring in sub-4-metre models on this platform as long as they also meet customer needs in the ASEAN and Asia Pacific regions. It is also looking at five- and seven-seater models.
"We are looking at scale and synergy across markets to reduce engineering costs. Can we do something for all these markets by utilising the very frugal platform? So, the fundamental aspect of this programme is that it is engineered and developed locally, and changes can be made faster with global inputs,” Hazela points out.
Besides product refreshes, the company is also seeking more feedback from the market to identify and address the other issues impacting the brand. “We want to get the feedback through the right people and integrate them in our plan through small engineering interventions and not wait for mega middle cycle action or MCA which is the European way of model upgrades,” he points out.
Interestingly, while the Indian market's core is moving up above Rs 10 lakh, Stellantis does not want to lose its core focus of catering to the affordable end of the market i.e sub Rs 10 lakh, and more compact offerings in the future are not ruled out. “We do not want to deviate from our core, which is to remain affordable. The theory is that if we are successful in India, we can be successful elsewhere,” he asserted.
Jeep Strategy
One of the challenges for a global firm like Stellantis is that while its models are global, they have to also address local sensibilities to succeed in a market like India. This is an exercise that may prove to be even more challenging for the higher end Jeep brand. The company is aware that Jeep desperately needs to widen its portfolio in the country — particularly into the Rs 17 lakh to Rs 25 lakh SUV market, which is dominated by Hyundai Creta.
“We have been in the Jeep segment which is 25 lakh plus. But the market is shifting. It is becoming 17 to 25 lakh, and that is the market we have to play. To play that market and keep the Jeep DNA, with the tech integrated so that way we can sustain for seven to eight years — that is what we are aspiring for,” said the new MD of Stellantis India.
One of the ways he may tackle this challenge is to use the C Cubed platform — currently powering several Citroen models — to create a more affordable Jeep for the Indian market. Stellantis’ Fiat brand is already using the platform.
“C-Cubed is becoming a core platform for all brands in a market like ours. If we can be successful in India, we can be successful anywhere,” said Hazela, whose expertise in sourcing and global exposure for procuring for international markets will come in handy in implementing this project.
While the study to introduce a sub-Rs 20 lakh Jeep on the C-Cubed platform continues, Stellantis is looking at revamping the Jeep’s existing products Compass and Meridian to reinvigorate the brand at the top end, where the heat has been building up from the likes of Mahindra and Toyota. “We will have models starting next month with Compass. We will have Meridian 2.0 in October,” assured Hazela. The Meridian 2.0 is likely to be a two row SUV, say sources.
EVs and Exports
On the electrification front too, it is a global play. India will be a key base for exports to the Asean region, says Hazela. Stellantis has already exported several batches of e-C3 to Indonesia and it is already considering exporting e-C3 AirCross to the South East Asian markets. Hazela says, "We have a design which can be adopted. We are evaluating the market pull right now. EV is not only for CAFE but also to feed the ASEAN region. If there is a genuine pull for our products, we will look to export e-C3 Aircross.”
Marketing & Distribution
Bringing in new models will not be the only investment the group will make to get its India strategy going. Stellantis plans to spend over Rs 200 crore on marketing the Citroen brand this year.
Shishir Mishra, the brand director for Citroen India, pointed out that several initiatives have been launched since May. “We brought on Mahendra Singh Dhoni as our brand ambassador. Campaigns with him have already led to about a threefold increase in inquiries and about a fivefold increase in walk-ins. There is a clear indicator that brand awareness is moving up," he said.
Another area of focus will be distribution. Citroen plans to have about 200 touch points across the country. “We are listening to and acting on the right advice,” said Mishra. Given Citroen’s traditional strengths in the areas of ride handling and performance, there is a strong emphasis on increasing test drives and experiences.
Apart from the independent Citroen and Jeep showrooms, the company is looking to expand the Stellantis House of Brands outlets, where Citroen and Jeep are sold under one roof. The company has rolled out 20 such outlets so far, and intends to expand to 40 by the end of the year. The company is also introducing smaller-format stores to ensure lower establishment costs and breakeven for the
dealers, which could help Stellantis open up new markets in the hinterland.
"You come on the radar by three things: one is marketing actions, second is you create facilities close to you, and third is when you put your cars on the road, which is the biggest one. We want to do all three," says Mishra.
This feature was first published in Autocar Professional's August 1, 2024 issue.