How Tatas plan to turn around Fiat in India

Tata Motors' three-year joint venture with Italy's Fiat Auto SpA will get a new lease of life, as the country's biggest vehicle maker plans to widen Fiat's product line and explore newer engine technologies.

Until recently, the JV, Fiat India Automobile, was languishing with heavy losses. Between January 2008 and March 2010, FIAPL posted a total loss of Rs 970 crore (Rs 9.7 billion), as its vehicle and engine making plant at Ranjangaon, near Pune, remained largely underutilised.

Although Fiat has been present in India for more than a decade, its product line-up includes just two cars - Linea and Grande Punto - in the volume category.

It also makes Palio Stile, which it sells across the country except in 13 cities, where the BS-IV norm is in place.

Fiat 500 is also selling in very low numbers.

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Tata Motors, which owns 50 per cent in FIAPL, recently said they were not satisfied with the way the partnership had progressed, but was confident of turning it around.

Carl-Peter Forster, chief executive and managing director of Tata Motors, said, "We are not satisfied exactly where we are right now in terms of volumes. But we are now taking a very strong stand in that business, under the Fiat brand."

After the distribution and manufacturing tie-up with Fiat, Tata Motors got engaged in other crucial ventures, like the buyout of Jaguar and Land Rover from Ford, followed by efforts to make it profitable.

The company was also busy with the development and launch of its small car, Nano.

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Tata Motors is exploring the possibility of launching more Fiat branded products in India and expanding its own sales outlets.

Fiat has a range of products, which are sold overseas and have the potential to be launched here.

"We are looking at expanding the reach of the Fiat brand, strengthening sales and marketing teams, while having a 'one team' approach. We can look at expanding the Fiat product range. Fiat has a very good range, some of which could be very successful in the Indian market. Don't get it wrong that the JV is not doing good; we see a lot of opportunities and it is up to us on how to leverage them," said Forster.

Also, a new small car, being developed by Fiat, would be launched in India by the end of next year. Tata Motors may

Fiat recently launched a hatchback, Uno, in Brazil and auto experts believe it may find its way into India too.

"We have too many capabilities of our own to fully go together with a large partner. We can work on engines or certain other technologies together, that is how we should take our partnership forward with Fiat."

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While it took Tata Motors about a year to make JLR profitable, FIAPL posted its first ever quarterly net profit only recently.

FIAPL posted a net profit of '22 crore for the quarter ended June, compared to a loss of 166 crore in the year-ago period, according to company document.

"Tata Motors is strong in the Nano and the (Indica) Vista segment. We need to think how we can leverage the strength of the Tata (Motors) side, with selective input from Fiat to grow our business," Forster added.

Lower demand for its range in India has hindered FIAPL's plans of utilising maximum potential of the plant.

"The Grande Punto sells less than 1,500 units a month, compared to more than 10,000 units sold by market leader Maruti Swift. Even the Linea has not been able to match up with the numbers of Honda City, which sells 3,500-4,000 units every month," said a city-based automotive analyst.