Admitting the joint venture between Tata Motors and Fiat had not been as active as planned, Tata Group chief Ratan Tata has said the association needs to be critically examined to optimise its potential.
In an interview in market research firm JD Power's report on the Indian automobile industry, Tata said his good personal rapport with Fiat Chief Executive Officer Sergio Marchionne has not been translated at the working level of the two firms. "I have to admit that so far, the venture with Fiat has not been as active as we had thought," Tata said.
With Fiat yet to make its mark in the Indian car market, Tata said the Italian company needed to bring in newer models here. "I think Fiat has to look at its cost structure in terms of parts and components," he said. As part of a 50:50 joint venture agreement signed in 2007, the two companies had agreed to a joint distribution network and back-end support, besides co-manufacturing of products at the Ranjangaon facility near Pune. Subsequently, Fiat cars are being sold at Tata-Fiat branded showrooms, but they have not been able to clock volumes.
Recently, the partners decided to redraw distribution plans.
Fiat proposed to have its own independent brand showroom, although it will continue to sell cars through Tata outlets.
In 2010-11, Fiat sold 21,066 units, as against 24,727 units in the previous fiscal, down by14.81 per cent. Tata also pointed out the need to have close coordination at the working level of the two companies. “We had looked at Latin America to do something together, but things didn’t move as planned," said he. He, however, ruled out ending the partnership.