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05-03-2012, 11:29 AM #1
Fiat, Tata Motors end distribution alliance in India
Fiat and Tata Motors have ended their distribution pact, under which the Italian automaker utilised the Indian company's distribution network in the country.
The distribution activities would be handed over to a separate Fiat group-owned company, the two companies said in a joint statement.
"Tata Motors' joint venture with Fiat was not producing the expected financial results or sales," Tata Motor's chief financial officer C.R. Ramakrishnan had said in February.
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.
"Fiat and Tata have agreed that in order to further develop the Fiat brand in India, management control of Fiat's commercial and distribution activities will be handed over to a separate Fiat Group owned company.
"Currently, Tata Motors has been managing the distribution responsibility of the Fiat branded products in India through joint Tata-Fiat dealerships," the companies said in a joint statement.
In its five years of operation, the industrial JV has produced some 190,000 cars and 337,000 powertrains.
It will continue with these manufacturing activities as they are outside of the new distribution agreement and will supply cars and powertrains to Fiat and Tata, the statement added.
Last year Tata Group Chief Ratan Tata had said the Fiat association needed to be critically examined to optimise its potential.
"... I have to admit that so far, the venture with Fiat has not been as active as we had thought," Tata had said.
Fiat will establish a separate company which will assume responsibility for all commercial and service related activities from the current Tata-dedicated team assigned to manage the Fiat brand, the statement said.
"Both, Fiat and Tata will endeavor to ensure a smooth transition of sales and service support to customers and the dealer network," it added.