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Will Tata Motors and Fiat Ride Out the Jinx?

Discussion in 'Fiat India News' started by Ravi, Dec 2, 2010.

  1. Tata-Fiat venture under strain; Accenture roped in for review
    Tags : Tata-Fiat venture under strain, Steering panel, comprising officials from both firms, set up, Economic viability

    The Indian Express
    Posted: Mon Jan 17 2011, 03:43 hrs New Delhi:

    http://www.indianexpress.com/news/tataf ... w/738361/0

    The distribution JV between Tata Motors and Italy's Fiat could be on the rocks. Fiat India Automobiles, the 50:50 joint venture between the two companies, has asked global consultancy firm Accenture to review its own “economic viability.”

    In this context, senior officials of Tata Motors and Fiat have formed a joint-steering committee (JSC). Accenture would report to the JSC and submit its report shortly.

    Apart from reviewing the distribution network of the JV, Accenture would also study the financial health of the Italian subsidiary. As per the company’s profit and loss statement filed with the Registrar of Companies (RoC), in the financial year ended March 2010, Fiat India had posted a loss of approximately Rs 290 crore.

    Although the company's senior management has said that Fiat would be able to break even by 2011-12, it still looks a tall order. Sources said while initially the two companies would set up indigenous dealerships and distribution networks, a complete separation is not ruled out in the future.

    When contacted, a Fiat India spokesperson, however, denied any such plans. He said Fiat had not retained Accenture for its India operations. “Fiat's joint venture with Tatas is well-established and the two partners are progressing as per plan,” he added. An email sent to Tata Motors did not elicit any response.

    The simmering differences between the JV partners started almost a year ago, with Fiat reportedly voicing its disappointment that its prospective customers were not being treated on par with the customers of Tata Motors in the showrooms. This prompted Fiat to explore the feasibility of setting up its own distribution network while continuing its relationship with the Tatas. "The initial plan was that while Fiat-Tata branded retail outlets would continue, Fiat would also simultaneously set up its own units," sources said.

    As per the JV announced in 2006, the two companies merged their respective retail networks which included 40 Fiat dealerships and more than 100 dealerships of Tata Motors. Apart from that, the two companies decided to invest up to Rs 4,000 crore in putting up a unit in the Tata-owned land at Ranjangaon, near Pune to manufacture Fiat and Tata cars and engines. The total capacity for the plant includes 1,60,000 cars and 3,00,000 engines.

    Fiat models like Palio and Linea are manufactured here apart from Tata Indica. "It would be difficult for Fiat to completely breakaway immediately from the JV because of the investments involved. Though restructuring the JV is certainly on the anvil," the source said. He said if a restructuring takes place, then the Italian car maker would have to chart a completely new India strategy.

    An auto analyst with a global consultancy firm said that for Fiat to make inroads into the 1.5 million unit passenger car market would be a very difficult task. "Fiat may not have done well so far in the Indian market. But without the Tatas, they may fall further behind,” he said.

    During April-December, the passenger car segment grew 32%, while sales of Fiat dipped 15% to 15,231 units compared to 18,087 units sold during the same period in 2009.
  2. I am really optimistic that something good will come out of it. This story is doing rounds since long and it is really a time for an action but with moderate risk. Fiat can not close the shop and go back now after having such good products/cars.
  3. Sumit

    Sumit Superiore

    true. its time for Fiat to act. they cannot let the advantage slip after having Punto , Linea and refreshed Palio in all likelihood up its sleeve.
  4. Bala

    Bala Esperto

    No chance.
    It's not enough for FIAT to make great cars and give them in TATA's hands for service.It's like a tamil saying-kiliya valathu poona kaila kudutha madhiri or kurangu kaila poomaalai!,which when translated mean like growing a beautifull parrot and giving it to a cat or giving a beautifull garland in the hands of a monkey.There is no way forward for FIAT,with TATA at the helms,they would be wise not to invest any more money in future in India
  5. mescotc

    mescotc Amatore

    Boisar , Tarapur
    Bala u said it right, but its not a easy task to have a pan-India service network, without tatas .

    lately heard abt 90hp engine for Vista ? & the way in which they have advertised is really nice, Fiat should take a close note of this.
    Come - on Fiat stop giving cutting edge tech. to other manufacturers, You will lose ur exclusivity.
    How can we proudly say that my Punto/Linea has got a diff. engine ?
    We feel down graded , for 2 reasons
    1) Fiat is very poor in advertisements ,
    2) Offers cutting edge tech to tatas ,
    so what's difference left ,btw. tata & Fiat cars ? we can't digest being compared as equivalent to a Tata car.
    Sorry I went a little bit off topic , But these are my feelings which i can't stop.
  6. Bala

    Bala Esperto

    It is better for FIAT not to ride out of the jinx.Fiat should accept the ground reality and get away with the loss of Rs.2,000 crores investment and not keep on loosing many thousand crores with TATA at the helm of service
    At the hindsight,even a Mahindra would have made a better partner and what has happened to FIAT would not have happened.
  7. mescotc

    mescotc Amatore

    Boisar , Tarapur
    Bala I disagree with ur above statement, see the JV btw Renault & mahindra for Logan, Mahindras had made times difficult for Renault, to the extent of a break-off , see the history of Bajaj-Kawasaki In both the cases the Indian partner had got tech. expertise from their foreign partners & had diched them after milking .

    Tatas not a cheater , what I would say Fiat was not able to bargain properly, to make the most out of the deal.

  8. Bala

    Bala Esperto

    But Mestoc,what happened with Mahindra was ultimately helpfull and fruitfull to the customers which is more important than the fate of the partner
  9. ratanshivi

    ratanshivi Regolare

    Mald (East)

    Nice articles and write ups!!

    Mind you Tata's success on Volumes has led to their own Disaster and that is why they are unable to Take care Of FIAT.

    One thing I guess all of you are forgetting that the Sales Numbers probably dont include the number of cars Fiat is exporting!!

    For all one knows they must be covering up a part of thier Losses in the Indain markets by exporting OR the other way round - Punto must have been made in India to export and the overflow they are selling in the Indian markets and that could be the reason such poor service on SAles!!
  10. Ravi

    Ravi Staff Member Janitor

    Grande Punto 1.3
    Just now CNBC TV18 was flashing a news that Fiat is reworking on JV and Business plans with Tata.
    Though it is known news for us, but looks something will happen sooner.

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