Tatas, Fiat team up to make cars

Tata Motors and Fiat have scaled up their alliance that was forged last year. The two companies will now undertake joint production of passenger cars, engines and transmission systems in India.

While the memorandum of understanding to establish a 50:50 joint venture was signed today, the shareholder, licensing and other agreements are being finalised.

Both the companies will use the Ranjangaon facility of Fiat in Maharashtra. The facility, which has been lying idle for long, is expected to exceed an overall output of 100,000 cars and 250,000 engines and transmission system.

Fiat will introduce the Fiat Grande Punto and the new Fiat Sedan"" its premium cars for the B and C segments "" and its small diesel engines.

Both the companies agreed to study for the next 60 days industrial and commercial co-operation in Latin America.

"In particular, the study will focus on different vehicles, especially utility vehicles and pick-ups, and on exploring the opportunity of using the existing Fiat production facilities in Cordoba in Argentina. Products manufactured there would be sold in various Latin American and overseas markets under both the Fiat and Tata Motors brands," Tata Motors said.

Ratan N Tata, chairman of the Tata group and Tata Motors, said, "This is the beginning of what promises to be a far-reaching, long term relationship between the two companies. They have complementary strengths, convergent objectives and shared values. Together, we can meaningfully address markets in India and other select geographies, combing technologies, products and human skills of both organisations."

Analysts said the development marked a renewed attempt by Fiat to boost its position in the rapidly growing Indian car market.

On the other hand, the Tata group would have access to modern engineering to support its growth plans, which were hit last year by the collapse of MG Rover, its British partner.