Fiat's decision to break away from the joint retail business model with Tata Motors could have largely been prompted by the new compact car scheduled to debut in 2012.
“This model has the potential to do big numbers and will make a big difference to Fiat's fortunes in India. It's best that the car enjoys greater exclusivity on the retail front,” a source told Business Line .
The joint exercise in sales and distribution with the Tatas has hardly helped Fiat's cause with monthly volumes of the Linea and Grande Punto hovering around a couple of thousand units. In addition, it has been a near washout from the brand-building point of view.
Fiat and Tata Motors decided to join hands nearly four years ago but clearly the venture has not quite gone according to plan. The manufacturing joint venture will continue at Ranjangaon near Pune but the Italian automaker has now realised that the marketing effort is best handled on its own. This especially becomes relevant when it is betting big on the sub-Rs 4-lakh car which is due to hit the roads next year.
The big breaks have continued to elude Fiat in India though it caught the eye of the market way back in 1996 with the Uno and in 2002 with the Palio. These were the real challengers to Maruti's supremacy in small cars, but Fiat just blew the opportunity.
The alliance with Tata Motors was heralded as a new beginning given that nothing had gone right for the company since the time it took control of its then partner, Premier Automobiles' operations at the Kurla plant.
The success of the new compact car is critical to Fiat from the viewpoint of kick-starting its India innings. For the next three years, headquarters at Turin (Italy) have prioritised Brazil, Russia and China as the growth engines with a host of new models from the stables of Fiat and Chrysler. If India should join this list, it is imperative for the new car to get the momentum going by 2014.
Fiat has also been focusing on getting new customers for its 1.3 Multijet diesel. Maruti already uses the engine for some of its models and further supplies will come from the Ranjangaon facility. Other manufacturers are tipped to be in the running while overseas shipments to other Fiat facilities are also believed to be on the anvil.