Admitting that the joint
venture between Tata Motors and Fiat has not been as
active as planned, Tata Group Chief Executive Ratan Tata
has said the association needs to be critically examined
to optimise its potential - reports India's Business
Standard.In
an interview in market research firm JD Power's
report on the Indian automobile industry, Tata said his
good personal rapport with Fiat Chief Executive Officer
Sergio Marchionne has not been translated at the working
level of the two firms.
He, however, ruled out
giving up on the partnership, saying, "... I think
there's nothing wrong with the concept of the deal, it
is a very healthy concept. I have to admit that so far,
the venture with Fiat has not been as active as we had
thought," Tata said at 'India Automotive 2020: The Next
Giant from Asia'.
With Fiat yet to make
its mark in the Indian car market, Tata said the Italian
company needed to bring in more new models to India.
"... I think that Fiat has to launch more models into
the market to keep dealers interested. It also has to
look at its cost structure in terms of parts and
components. So the joint venture needs to be looked at
quite critically and until that happens, it's not going
to be optimised," he said.
As part of a 50:50
joint venture agreement signed in 2007, the two
companies had agreed to a joint distribution network and
back-end support, besides co-manufacturing of products
at the Ranjangaon facility near Pune. Subsequently, Fiat
cars are being sold at Tata Fiat branded showrooms, but
it has not been able to clock volumes. Recently, the
partners decided to redraw distribution plans, with Fiat
proposed to have its own independent brand showroom,
although it will continue to sell cars through Tata
outlets. In 2010-11, Fiat sold 21,066 units, as against
24,727 units in the previous fiscal, down 14.81%.
Tata also pointed out
the need to have close coordination at the working level
of the two companies to take forward the partnership.
"As far as what else we can do with Fiat, I think Sergio
Marchionne and I can really talk to each other. However,
at the working level, it hasn't quite been that way. We
have looked at Latin America to do something together,
but things haven't moved as they should have done," he
said.
Report courtesy of
Business Standard
