Fiat,Tata JV to continue

The decision has been made and it is a positive one! Ratan Tata has made it clear that the company has been working on its alliance with Fiat Motors. However, the terms and conditions of the alliance will be revised once again but the joint venture will be carried on. Earlier, there were some rumors in the Indian car market that Tata Motors and Fiat both were giving second thoughts in its 50-50 partnership and were revaluating if it is realistic or not.

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It is a known fact that Fiat and Tata Motors as a joint venture has suffered losses, which included the wrong assumptions made with reference to volumes, assumptions on the off-take, which also did not work out. The major problem for Fiat was that the cars were being sold by the means of Tata Motors’ network and dealers, overpowering the individual identity of Fiat. Adding to this, Fiat has also failed to build a rousing value for its products, which would have helped consumers to get attracted towards it. Sources say that with the alliance of both Tata Motors and Fiat, both companies need to re-evaluate their distribution arrangement and concurrence. Now, Fiat should assertively divert its all attention towards building up its very own distribution network and make its own brand value in the Indian car market.

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If so far, Fiat and Tata Motors had not been working in harmony, then they should do from now own. The agreement or the revised contract must give the flexibility to Fiat to set up its own dealership network. Furthermore, Fiat also needs to give a boost to the brand at the initial level. The image rebuilding is the first step that has to be taken by Fiat and for a huge investment needs to be done.

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If reports are to be believed, in the last 3 years as a joint venture, Tata and Fiat bear a loss of a whopping Rs. 1,214 Crore. However, in the fiscal year 2011, the joint venture brought down its losses from 272.30 crore in 2010 to Rs. 243.60 crore by cost cutting method and more exports. But the sales in the Indian car market were still lukewarm, in spite of attractive discounts.

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