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Tata-Fiat alliance to leverage mutual strengths
By agencies
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Thursday, 12 January 2006, 20:30 IST
NEW DELHI: The much speculated alliance between Tata Motors and Fiat Auto India will finally be put to rest with their planned joint presentation and announcement, at the Auto Expo.
The chief of both the companies are expected to make a joint announcement of their alliance later this week, the company sources said.
The alliance is likely to be a joint marketing and manufacturing arrangement in which Tata Motors will jointly manufacture Fiat models at its facilities in Pune and at Fiat's facilities in Kurla near Mumbai and in Ranjangaon near Pune.
Both the entities were in talks for more than a year and had made an announcement in September last year about their intention to explore the possibility of an alliance. The co-manufacturing and co-marketing alliance will enable the Fiat Auto India to leverage the large manufacturing and marketing network that Tata Motors has. In the absence of adequate financial support from its Italian parent, with Fiat going to the brink of bankruptcy, Fiat's Indian subsidiary has been hamstrung and not been able to either bring in new models or increase capacities. Further, with product sales crashing, Fiat has been desperately looking for alternative strategies.
If the new alliance includes fund infusion by Tata Motors into Fiat India's Ranjangaon unit, which was earlier expected to be the new base from which Fiat would produce its more modern cars, then there are at least three relevant cars that can be manufactured for the Indian market. This includes the new Palio, which features a whole new interior package and new design headlamps and tail lamps. It has already been introduced successfully in markets such as Brazil in South America. And also include Grande Punto, which has won a few awards in Europe for its unique design and practicality.
The alliance between Tata Motors and Fiat is expected to be a mutually beneficial agreement. Tata Motors is expected to benefit from and draw on the enormous expertise that Fiat has built over the years in developing economically priced small cars and entry-level sedans, they added.