Fiat cuts India distribution tie with Tata Motors

MUMBAI/MILAN Sat May 5, 2012 5:13am IST

An employee works in the Fiat factory at Ranjangaon, around 190 km east of Mumbai April 2, 2007. REUTERS/Danish Ismail/Files

An employee works in the Fiat factory at Ranjangaon, around 190 km east of Mumbai April 2, 2007.

Credit: Reuters/Danish Ismail/Files

Stocks

   
Rajalakshmi (C), 28, smiles after winning the Miss Wheelchair India beauty pageant in Mumbai November 26, 2014. REUTERS/Danish Siddiqui

Miss Wheelchair India

Seven women from across India participated in the country's second wheelchair beauty pageant, which aims to open doors for the wheelchair-bound in modelling, film and television, according to organisers  Slideshow 

MUMBAI/MILAN (Reuters) - Italian carmaker Fiat is to set up its own car dealer network in India to grow sluggish sales, ending a six-year distribution agreement with Tata Motors.

Fiat said on Wednesday the move should help build its business in India, a booming market where foreign producers Ford, Honda and Nissan have recently acted to take more control of their own operations.

The company, which sells 20,000 cars per year in India and did not say how much it would invest in developing its dealer network there, is far behind European and U.S. competitors in high-growth Asian markets, with scant presence in China, the world's biggest market.

Fiat, which will set up a new company to sell its models and build on the network of Fiat-Tata dealerships, has a fair amount of brand recognition - its 1100 sedan was sold under licence in India from the mid-1950s to 1997, first as the Fiat 1100 Delight and then as the Padmini. The car is commonly used as a taxi.

It currently sells the Linea, Palio and Punto models in India, and aims to introduce more brands from a portfolio which includes Alfa Romeo, Chrysler, Dodge and Jeep.

"Development of the new Fiat dealer network for India will start progressively and the 178 existing Fiat-franchised Tata dealers in 129 cities will be encouraged to form the foundation of the future network," the companies said in a statement.

A partnership producing Fiat and Tata cars and also engines and powertrains at a plant in Ranjangaon, remains in place, the two companies said. In its five years of operation, the joint venture has produced 190,000 cars and 337,000 power trains.

Both partners have indicated that changes were in the works.

Tata Motors chief financial officer C.R. Ramakrishnan said in February the joint venture with Fiat was not producing expected results or sales.

Fiat chief Executive Sergio Marchionne said in March the partnership "has tried to do too much".

(Reporting by Sumeet Chatterjee and Jennifer Clark; Editing by Dan Lalor)

REUTERS SHOWCASE

Kashmir Attack

Kashmir Attack

Ten dead in Kashmir's worst militant attack in more than a year  Full Article 

OPEC Meeting

OPEC Meeting

Gulf states seek to block OPEC oil output cut.  Read 

E-Commerce Boom

E-Commerce Boom

Online grocers come up trumps in India's e-commerce boom   Full Article 

GDP, RBI Preview

GDP, RBI Preview

GDP growth set to weaken, business wants reforms more than rate cut  Full Article | Related Story 

Jaitley to Rajan

Jaitley to Rajan

Jaitley likely to meet Rajan on Monday to urge rate cut  Full Article 

Banking Sector

Banking Sector

RBI releases final rules for niche bank licensing  Full Article 

Jamini Roy

Jamini Roy

Photo Gallery – Bengali household name Jamini Roy’s paintings  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage