If the healing agent worth Rs 200 crores of investments works, India will add to the list of countries where one of the most diverse international strategies in the recent history of the auto industry under the name of 178 World Car project was successfully executed and is being successfully run. Forerunner of other world car projects like Toyotas IMV project or Renaults Logan world car programme, the problems that Fiat has faced in India questions the merits of sustainable and robust strategy, globalization, outsourcing and modularity as a key to world car programmes. Seeking the participation of Italy, Brazil, Poland, Turkey, Argentina and India, the Palio story represents the dynamics that link globalization, outsourcing and modularization in the auto industry. Interestingly, the Palio project started in 1992 as a restyling of the Uno model for the Brazilian market. In 1993, the scope of the project changed drastically and Fiat decided to create a "World Car" project (internally named 178) whose main features would be to define a family of new models targeted at emerging markets, based on same platform with at least 69 per cent of parts in common and are produced and sold without significant changes in each participating market. Other features included worldwide supply chain to assembly in different places of the world and absolute cross-country standardisation of each version of the models produced.
With IDEA Institute entrusted with the task of style development, outsourcing of engineering was heavy and the platform consisted of 12-module based teams (engine, suspension, seats, doors, cockpit, etc), composed of engineers and technicians handpicked from various Fiat departments. A multinational team of experts from different countries defined the features of the model, bearing in mind the specific demands of each of the markets in which the Palio would be sold. Whats more, the 60 major components suppliers to the Palio were involved in the development of the product as co-designers. They guaranteed strictly identical components, built in small parts of the world with the same materials, the same manufacturing processes, the same technologies and the same quality.
This strategy made it possible to cut development time for the model, but above all to guarantee that the manufacturing standards, and therefore the quality of the Palio and now of the Siena, Palio Weekend and Strada (pick- up) - are always the same and the highest possible, wherever the car is built and whatever the labour culture and mentality of the country in which it is manufactured. While various arrangements were worked out for production, in India, Fiat started producing the Siena in April 2000 with plans to invade China and Russia. Fiat entered China in the first quarter of 2002, further expanding the envelope of the 178 World Car project.
Stress on modularization meant a common learning and close co-ordination between the company and its suppliers. Stress was also laid on suppliers proximity to the OEM assembly plant to aid high levels of modularization. And unique to the 178 World Car manufacturing plants is the setting aside of an area for supplier park. Stress on modularity-in-production enabled modular manufacture, which is extremely varied and dependent on local factors. In the Kuria plant, as mentioned earlier, the body welding shop was completely restructured. A strategy to outsource a lot of components was employed to reduce cost to minimise investment risk. Modularity meant each plant was blessed or cursed with minimal automation unlike the plants in Europe and Italy especially, which for cost reasons had to have a good amount of automation and stay lean. In fact, the 178 World Car Project teams endeavour was that if each plant uses the same technology supplier and component suppliers are the same for at least a part of the process, then working by modules means repeating in different plants an established set of relationships, working methods, standard operating procedures, rules and communication and documentation procedures.
Project complexity increased tremendously as the 178 World Car project touched different countries like India, where product customization and conspicuous local adjustment in technologies was required. Also unique to India proved the interesting relation between globalization, outsourcing and modularity in design and manufacturing. The IDEA Institute, which designed the Palio, also designed the Tata Indica project platform which has come to lead the B-segment (Indica hatchback) and C-segment (Indigo and Marina estate) where Palio models (Palio hatchback, Petra sedan and Week-end estate) are spread. Tata displayed a crossover concept of its Marina estate at the recent Geneva Motor Show - a model that could give the Palio Adventure Sport a run for its money. While Fiat models of the 178 platforms are offered in India with the option of a 1900cc, in-direct injection diesel engine, the Indica platform models are available with the option of a 1400cc turbo-diesel engine (naturally aspirated diesel for Indica hatch) from day one. The models based on the Tata Indica platform have also come to teach Fiat and other automobile manufacturers the intrinsic art of competitive pricing and value-for-money packaging.
The pricing of the Adventure Sport displays this fact, and almost all too painfully in spite of the fact that localization was 178 World Car projects important strategy. According to the industry sources, the Palio Petra and Adventure are nearly 95 per cent localized with prestigious Tier 1 suppliers involved. Tata Auto Plastics, which has collaboration with Faurecia of France, supplies the bumper, dashboard and centre-console of the Palio Exide Industries and Amara Raja, supply batteries whereas the paints are supplied by ICI India. Front fender, front door, rear door, body-side stampings inner door frames, door assembly, bonnet inner and outer assembly, dash firewall, quarter panel assembly and cowl upper assembly supplied by Automotive Stampings & Assemblies Ltd (ASAL), again a Taco Group company specializing in auto sheet metal manufacture. Window regulators are supplied by Saina Industries. Group Antolino supplies the door pads, roof liner, and sun visors. Supreme Teves supplies carpet. Asahi India supplies the glass.
Hindalco supplies the mag wheels for the Palio and Petra. Chennai based JKM Dae Rim Automotive supplies 17 critical engine and transmission components of the Palio including case differential, transmission dog control assembly, body speedometer, assembly lever, clutch lever, clutch release fork, 3rd and 4th gear bush, gear-box selector shaft assembly, primary shaft bush, gearbox support, differential support and engine support. Jaihind supplies clutch housing, which is machined by Ghatge Patil Industries. Anurag supplies gearbox housing, which is machined by Mahabal. While the struts are imported, Trelleborg supplies suspension bushes while T C Spring supplies springs. Wheels India supplies the steel wheels. Instrument panel is from Veglia. Magneti Marelli supplies the ECU. Indo Japan Lighting supplies the headlamps and Philips, the bulbs. Lumax supplies tail lamps. Purolator supplies filters. Lucas TVS supplies starter. Mico supplies alternator. Amtek supplies the engine con rod. Escorts supply the pistons. Tata Ficosa is the supplier of ORV mirrors and washer system. Fasteners are supplied by Sundram Fasteners while Goodyear India supplies tyres. Roots Industries is the supplier of electric horns. Minda Huf supplies steering cum ignition lock, door locks and inside as well as outside door handles. Radiant Polymers supplies radiator fan shroud, air filter assembly and dashboard front panel. Sanden Vikas and Dense India supply HVAC systems. Brakes India Limited supplies braking system components to the Palio. Remsons supplies a variety of friction-free cables (gear linkage, clutch, speedometer, parking brake, etc), manufactured at their Gurgaon facility, for the Palio. ishwakarma - Automotives is a supplier of steering components to the Palio. Moonlight Auto supplies jack assembly and tool kit.
Working closely with its suppliers, Fiat India, in a recent move, slashed the price of the Palio. This may combine with the admiration the Palio model range has come to receive in India as well as wherever the 178 World Car project cars are sold. The Palio II, Petra II and Adventure II may also arrive here and get a range of new engines - a 1.3JTD engine that Maruti will be building at its new plant at Manesar and the 1.4-litre, 85bhp, "Fire Flex" petrol engine that is already available in Brazil. The petrol version of this engine is said to be available in China. The upgradation to 1.4-litre petrol engine from the current 75bhp, 1.2-litre FIRE engine will be a big welcome in terms of performance and efficiency where as the 1.3- JTD, which won the "Engine of the Year" award in Europe, recently, and was developed jointly by Fiat and GM, will present Fiat India with a competitive edge both in terms of technology as well as price. The only disadvantage may be the fact that Maruti and GM India models will be sharing this engine with the Fiat models. However, before new engines or new models and upgrades can be considered, it is absolutely necessary that Fiat India look into and do away with the long-standing stumbling blocks, which have reduced the company to this state. A stricter quality control, motivated dealers, easily available spares and competitive prices are the need of the hour. Once the stumbling blocks are removed and before the competition gets insurmountable, Fiat India can team up with its vendors in an endeavour to introduce newer models like the Idea and Panda, and at competitive prices.
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