Fiat pumps $1bn into Indian car market

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NEW DELHI -- Italian automaker Fiat will invest $1bn in India's automotive market, a senior executive told a Confederation of Indian Industry meeting in the nation's capital of New Delhi.

The largest ever financial commitment by the $50bn conglomerate will be spread over five years till 2002, said Fiat CEO Paolo Canterella. The automaker recently gained Indian government approval to form Fiat India Auto, a joint venture with Bombay-based Vinod Doshi Group, which controls Fiat licensee Premier Automobiles.

The Palio world car will be the first launch. Commercial production at a soon-to-be built plant in the western Indian state of Maharashtra is slated to begin by late 1999, adding to its Fiat Uno small car that is currently made and sold in India by Premier.

"If all our plans materialize, we believe that by the year 2000 we will be producing between 900,000 to 1 million cars," Cantarella said. Though the production target may be met, a slumping Indian economy and slowing demand for cars may pose a hurdle. Other automakers and industry analysts predict the market for passenger cars in 2000 will touch 600,000 to 700,000 from last year's production of an estimated 400,000.

Copyright July 1997, Crain Communications Inc.

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