Tata, Fiat will Lambada in Latin America

MUMBAI: Tata Motors on Tuesday announced that its alliance with Fiat SpA will expand to making cars in Ranjangaon near Pune and expand their partnership to Latin America.

DNA Money was the first to report on Tuesday about the global extension of the Tata Motors-Fiat alliance.

“This is the beginning of what promises to be a far-reaching, long-term relationship between Fiat Group and Tata Motors,” said Ratan Tata, chairman of Tata Motors.

As per the agreement, Fiat will introduce models such as the Grande Punto hatchback and a sedan in India. The company now sells the Palio hatchback and the Petra sedan in the country, making it at the Kurla factory in western India.

Fiat will also introduce a small diesel engine in India, the statement said, without letting out more details. Could the small engine be for the Rs 1 lakh small car, only time can tell.

The tie-up is expected to give Tata Motors access to Fiat’s technology and models to compete in India with Suzuki Motor Corp and Hyundai Motor Company.

The 107-year-old Italian carmaker’s agreement with Tata in January  this year was mainly for marketing its cars through Tata’s dealerships.

The tie-up expansion would crystallise what was till today a marketing and distribution partnership between the two auto majors. It follows the trend of rebalancing and new partnerships being struck by leading global car makers.

The tie-up between the two companies “is evolving by leveraging on the respective strengths and continuously identifying new opportunities to be jointly exploited,” said Fiat’s chief executive officer Sergio Marchionne in the joint statement.

The initial agreement is envisaged to set up an equal joint venture in India to manufacture cars, engines and transmissions for the local and overseas markets.
The two companies will jointly study for 60 days a proposal to expand their relationship to Latin America, it said.

The new partnership comes when Fiat has made a smart turnaround in its fortunes on the back of a new car model Grande Punto.

Fiat’s Marchionne is credited of steering Fiat onto the path of profitability. The company trimmed costs and cut jobs last year, while also forming alliances with companies, including Ford Motor Co., to bring the auto unit back to profit in the last quarter of 2005 after four years of losses.

Fiat formed a tie-up with Tata in January ostensibly to breathe life into flagging sales in India while Tata Motors eyed Fiat’s technology  and designs, especially its common rail technology for diesel engines.

Ratan Tata, chairman of Tata group incidentally was recently inducted into the board of Italy’s biggest car maker, cementing further the two group’s relationship.
The facilities, based in Ranjangaon, Pune are expected to exceed an overall output of 10,0000 cars and 2,50,000 engines and transmissions.

Meanwhile, Tata Motors posted a 40% gain in first-quarter profit, aided by local demand for Ace mini trucks and Safari sport-utility vehicles and exports to South Africa.
“Existing and future models of Tata to be launched in the next five years will be manufactured at Ranjangaon,” Ravi Kant,managing director of Tata Motors, said at a press conference.

The study for expanding the relationship to Latin America will focus mainly on utility vehicles and pick-ups and explore the possibility for using Fiat’s production facilities in Codoba, Argentina, it said.

The products made in Latin America will be sold in that continent and elsewhere using Fiat and Tata brand names.

The products manufactured there would be sold in various Latin American and overseas markets under both Fiat and Tata brands. With Bloomberg