Fiat ends distribution arrangement with Tatas, floats own company

Fiat has ended its sales and distribution arrangement with Tata Motors and has floated a separate, Fiat Group-owned, company to undertake its commercial and distribution activities, in order to further develop the Fiat brand in India.

Tata Motors has been managing the distribution of Fiat-branded products in India through joint Tata-Fiat dealerships.

''Tata Motors will hand over the distribution and service responsibility for Fiat cars in India to a Fiat Group owned company being formed for this purpose,'' the companies said in a joint statement.

This is part of the growth plans for Fiat in India and the Italian group proposes to provide greater focus on the Fiat brand.

The Fiat-Tata joint venture, announced in 2006, also encompasses a state-of-the-art manufacturing facility at Ranjangaon in Maharashtra. The manufacturing plant for Fiat and Tata cars also produces engines and transmissions for both the Indian and export market. It also recently announced a contract to supply small diesel engines to Maruti Suzuki.

The joint venture has so far produced some 190,000 cars and 337,000 powertrains. This, however, will continue outside of the new distribution agreement and will supply cars and powertrains to both Fiat and Tata.