Distribution pact between Fiat and Tata ends

In an attempt to revive the struggling operations in India, the Italian car manufacturer Fiat will take complete control of its marketing, sales and service activities. This will regulate once the distribution pact of Fiat with Tata Motors comes to an endsometimesin the near future. This move is a part of the re-alignment process of Fiat. The firm intends to grab its lost position in the Indian automobile market as soon as it can and that is why it is coming up with new models to be launched in India once it’s settled with the infrastructure, resource supply chain for its production unit.

The firm mentioned its intention through a press release, “Tata and Fiat have agreed that in the coming future for the development of Fiat brand in the automobile sector of Indian economy this move is necessary. The management control of the Fiat brand has to be given to a separate firm that is Fiat group owned for its distribution and commercial activities.” Right now Tata Motors has been taking care of the responsibility for the distribution of the Fiat branded products in the automobile market of India through the joint dealership of Tata-Fiat.

Distribution pact between Fiat and Tata ends
According to Fiat this particular step of the firm will make an improved focus on its brand of products. There is an important fact to notice here is, that the Tata and Fiat alliance will just end their relation in almost every other field especially in the distribution segment but the joint venture will continue manufacturing cars for Fiat at the Ranjangaon facility in Maharashtra.

The manufacturing activities will continue as it is since they have been kept outside of the latest distribution agreement and the production of cars with the powertrains to Tata and Fiat will go on as it was,” Fiat declared. Operations of Fiat in the Indian automobile market have been struggling lot for couple of years now. Even when the automobile market in India has grown exponentially, the firm still remains a small player. Fiat managed to sell only 16,073 units of its vehicles in the automobile market of India in the last fiscal where nearly 2.6 million passenger purpose vehicles were being sold. Even the chief of Tata group, Ratan Tata said that their venture with the Fiat firm has not been that active as they had thought about earlier. But non-the-less the chief Ratan Tata has a very good rapport with the CEO of Fiat, Sergio Marchionne that has never translated at any working level of these two companies.

Fiat has been in the initiation of a separate network of dealership outside the Tata-Fiat joint venture network it has at present. Fiat admitted that the requirement to develop a fresh dealership network for the Indian market will begin progressively and the already existing 178 Tata dealers which are franchised by Fiat spread across 129 cities will be gradually encouraged to build the base of the future network of Fiat alone. Fiat will create a fresh company that will be separate and will also assume the necessary responsibility for all types of commercial and service kind of activities.

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