Fiat goes it alone, parts with Tata Motors

For years now, despite having great products, the feeling in Motown is that Fiat had got its prerogatives wrong on the dealership and service network front in India.

The long due correction is happening, finally.

On Wednesday, the Italian carmaker and partner Tata Motors said they are ending their distribution pact.

Fiat India will now set up a separate company for its marketing and sales activities and plans to have an entirely new product portfolio going ahead.

“Due to congestion at the dealerships, customers were not able to get the Fiat experience. The new dealerships will be set up as per the company’s global standards,” a spokesperson of Fiat India said.

Work on creating separate dealerships has already begun. “The Tata Motors dealers have already been communicated and were given an option of setting up separate Fiat dealerships as well,” he said.

The 178 existing Fiat-franchised Tata dealers in 129 cities will be encouraged to form the foundation of the future network, said company’s statement.

As part of the new strategy, the company aims to establish an entirely new dealer network in a phased manner.

Fiat, however, did not provide the number on the dealer network targets for the first year. Initially the company is planning to set up dealer outlets in metro cities, followed by A and B class cities.
The Tata-Fiat distribution pact has been under stress with sales of Fiat declining. Fiat India sold 16,073 units in fiscal 2012, which saw a decline of 23.87% from the previous year.

Tata Motors had been previously hinting at going separate ways on the distribution side. Ratan Tata, chairman of the Tata Group, had previously said that the Tata-Fiat JV needed to be critically examined.

Under the 50:50 joint venture inked in 2006, the Fiat-Tata joint venture also encompasses manufacturing activities located in Ranjangaon in Maharashtra to produce Fiat and Tata cars in addition to engines and transmissions for both the Indian and export market and recently announced a contract to supply its small diesel engine to Maruti Suzuki.