Tata feels JV with Fiat is stalling; needs another gear
16 June 2011
Tata Motors chairman Ratan Tata is clearly not satisfied with the way his company's partnership with Italian carmaker Fiat is heading, saying on Tuesday that the joint venture has not been performing as per expectations.
''I have to admit that so far the venture with Fiat has not been as active as we had thought,'' Tata said in an interview to market research firm JD Power Associates. He said the partnership with needs to be critically examined for optimising potential. Among other things, the Italian company needs to bring in more new models to India, the Tata group head said.
Fiat India currently sells only three models in the country – the hatchbacks Fiat Palio and Punto and the sedan Fiat Linea. Although all three models have got decent reviews on price, features and performance, the company has been registering moderate sales.
Tata said, ''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."
The joint venture, now nearly four years old, is still struggling to break even. It had suffered a loss of Rs260 crore in 2009-10 and analysts feel figures for 2010-11 could be similar.
Tata Motors however ruled out the two companies parting ways. ''Tata Motors accords great importance to the strategic alliance with Fiat. The introduction of Fiat engines in the second generation Tata car platform (the Tata Indica Vista and the Tata Indigo Manza) has played a critical role in the performance and growth of these brands,'' a company spokesperson told DNA newspaper in response to a query.