Ratan Tata Says JV with Fiat-Tata Needs Critical Examining

Fiat currently operates in the Indian auto market through its partnership with home grown manufacturer, Tata Motors, however the Italian auto maker has not been making a headway in this market for quite some time now.

The chief of the Tata Group, Ratan Tata, recently said that the JV between Fiat and Tata Motors has not gone according to plan and adding that they need to critically examine the association for increasing its potential.

In a report by the JD Power, a market research company, Tata had said that his personal good rapport with the CEO of Fiat, Sergio Marchionne had not translated into the two companies working level. He admitted that their JV with Fiat was not performing as actively as he had imagined it would. He also though the Fiat needed to introduce more products in the Indian auto market is they wanted to keep their dealers interested.

He also said that they have to take a look at their cost structure regarding components and parts. As a result the JV needs to be examined critically, and till that takes place, it will not be optimized. For their 50:50 JV signed on 2007, both the firms agreed to back end support and a combined network of distribution, apart from co-manufacturing their products at their Ranjangaon plant close to Pune.

Following the JV, cars from the Italian manufacturer are sold at showrooms branded Tata Fiat, but they have not yet clocked a lot of volumes. The partners recently took a decision to redraw their distribution plans that include Fiat proposing their own separate showroom, thought their models will also be sold at Tata showrooms.

Fiat managed to sell around 21,066 models in 2010-11 fiscal period, in comparison to the 24,727 models they sold in the last fiscal year, a drop of 14.81%. Tata also said that they need to more close coordination between the two firms at a working level for taking their partnership forward.

He said that regarding what they can do next with Fiat includes a talk between him and Fiat CEO, Sergio Marchionne. At the working level, however, it hasn’t been quite that way. They have also looked at the Latin American market, but things haven’t moved in the direction they wanted to. He has however, ruled out on ending the partnership, adding that he didn’t there was anything wrong with this deal concept, and that is quite a healthy concept.

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