Tata Motors — Fiat JV to sizzle passenger car market

26 July 2006

Tata Motors and Fiat Group have decided to significantly expand their evolving product, production and marketing partnership for both the domestic and international markets. Both sides have been studying possible areas of cooperation for quite some time now, after announcing the partnership last year.

The two companies would now set up an equal JV to produce passenger cars, engines and transmissions for the domestic market. Fiat's Ranjangaon facility in Maharashtra, which is lying unutilised now, would come under the JV.

The JV would produce passenger cars under both Tata and Fiat brands and would have an annual capacity of 1 lakh cars. It would also produce 2.5 lakh engines, the new generation common rail diesel engines developed by Fiat, and transmissions at the Ranjangaon facility.

It is not clear which the JV would assemble Tata models, though it is likely that part of the production of the next generation Indica hatchback and Indigo sedan would be by this JV. This would ease capacity constraints for Tata Motors when the new models are introduced.

It has been announced that the JV would assemble the Grande Punto and a new sedan from the Fiat stable. Grande Punto is a premium hatchback, which would compete against the likes of Suzuki Swift and Hyundai Getz. The new sedan from Fiat would be a replacement for the existing Siena range.

The diesel engines manufactured by the JV would be used for both Tata and Fiat cars. The small diesel engine by Fiat is touted to be the best in the world and would help Tata Motors to bridge the engine technology gap with competitors. Incidentally, Maruti would start manufacturing the same engine for its own range of cars by the end of this year.