The renowned automotive company of India Tata motors and Italian car maker Fiat have decided to reform their joint venture in order to push the diminishing sales of Fiat and also position it in the country. At present, the distribution of the products of the Italian car maker was handled by Tata Motors under joint Tata -Fiat authorised dealerships. However, with this new development, the distribution and services of the Fiat cars would be transferred to a subsidiary of Fiat group, which will be formed just for this purpose.
Both the companies agrees that the management control of the Italian company's commercial and distribution should be handed over to a subsidiary of Fiat to develop the brand Fiat further in India.
Fiat and Tata cars along with engines and transmissions are manufactured at the Rajangaon facility in western India. At the Rajangaon plant, advanced technology is used to produce cars of both the brands. Engines and transmissions set are also manufactured in the plant for the domestic and foreign market. The plant recently signed a contract with Maruti Suzuki to supply small diesel engines.
In last five years, the joint venture manufactured 3,37,000 powertrains and 1,90,000 cars.
The new Fiat dealer network in India is scheduled to develop at a fast pace, and the already existing 178 Fiat-franchised Tata dealers in over 129 cities will form the base of the future network. A whole new and separate company will be opened by Fiat that will be accountable for all the tasks related to the sales and the service, which are presently managed by Tata Motors.
Fiat, which is the manufacturer of hatchback Grande Punto and Sedan Linea has been struggling for sales. For the fiscal year 2012, Fiat managed to sell only 16,095 cars in India compared to 21,066 vehicles sold in FY 2011. On the contrary, the passenger vehicles sales of Tata Motor in fiscal 2012 stood at 313,710 units, which showed an increase of 5 per cent resulting in highest sales ever in a year. After reporting 7% decline in sales in April, shares of Tata Motors closed down 3.8 per cent at Rs. 304.50 on NSE on Wednesday.
