Fiat to end dealership JV with Tatas
NEW DELHI: Continued poor showing in the Indian market is set to see Fiat completely exit joint-branded showrooms with Tata Motors as the Italian car major makes a renewed push to revive sales. While it will make the transition in the top 20 cities by 2015, the rest of the joint-branded dealerships will be disbanded thereafter.
Tata Motors is currently responsible for the sales and service of Fiat cars in India and the transition comes at a time when the foreign partner is battered with poor standing for a very long time. "The new Fiat dealerships will be 3S facilities (sales, service and spares) and will display Fiat's brand identity and style quotient to the Indian market," Ravi G Bhatia, V-P (Commercial) of Fiat India Automobiles, told TOI. "We will be then like any other independent car brand in the country." Tata Motors did not reply to a questionnaire on the matter.
Fiat sales were down 15% last fiscal at a paltry 21,066 units, alarmingly in a year when the overall car market had expanded 30%. In the April-November period of 2011-12, the company's car sales are down a massive 31% (at 10,351 units) even though the overall market is lower by just 3.5%. Bhatia said there were a total of 67 Tata-Fiat joint-branded showrooms in the top 20 cities. "While we hope to make the transition at 45 dealerships by 2014, all the 67 will be covered by 2015. Anything beyond that will follow after that The company will approach existing Tata dealers for the new retail push. "The idea is to involve them as we move to new locations. This is a joint decision of Tata Motors and Fiat." The exercise is expected to cost around Rs 270 crore, which will be borne by the dealers.
Bhatia said Fiat's international architect has been engaged for the design and layout of the new dealerships. "Also, we plan to have a small cafe at the dealerships." The first independent dealership will come up at Hyderabad in the next two months.
The transition is based on the feedback of the customers, Bhatia said, adding that there was a need to have a "Fiat experience" at the retail end. Fiat had hired global consultancy firm Accenture as well as auto research firm JD Power to suggest ways to improve its position in India.
The cities that will form part of the first wave of transition will include Delhi, Mumbai, Kolkata, Chennai, Bangalore, Pune, Jaipur and Hyderabad.
Fiat and Tata Motors have a 50:50 joint venture - Fiat India Automobiles - for manufacturing cars and engines for both brands at a factory in Maharashtra. Apart from the manufacturing tie-up, Fiat has entrusted Tata Motors for distributing and selling its cars through its dealerships that also provide after-sales support. This is where the problem lies, according to most analysts.
Tata group has also expressed concern at the way Fiat's sales have been handled so far. Tata group chief Ratan Tata had said last year the Fiat joint venture needed to be critically examined. Ratan Tata, in a recent interview, said his good personal rapport with Fiat Chief Executive Officer Sergio Marchionne had not 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," he said last year..