Tatas and Fiat have decided to bid adieu to each other for distribution and servicing of Fiat vehicles.

The decision was to `further develop the Fiat brand in India’ but the Fiat vehicles would continue to be made by the joint venture in which Tata Motors and Fiat have equal stake.

The development of new Fiat dealerships would begin progressively and the existing 178 Fiat-franchised Tata dealers in 129 cities would be encouraged to form the foundation of the future network, both companies said in a joint announcement to the stock exchanges.

The companies stated that with a view to `further develop the Fiat brand’ in the country, the management control of Fiat’s commercial and distribution activities would be handed over to a Fiat group owned company. At present, Tata Motors was managing the distribution of Fiat branded productions in India through joint Tata-Fiat dealerships.

However, the Fiat-Tata joint venture in so far as manufacture of Fiat vehicles would be left untouched as they were `outside of the new distribution agreement’ and would supply cars and power trains to Fiat and Tata.

Fiat would form a new, separate company for all commercial and service related activities from the current Tata dedicated team that was assigned to manage the Fiat brand and both companies would endeavour `to ensure a smooth transition of sales and service support to customers and the dealer network’, the statement said.

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