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Fiat finally to set up independent dealerships

By Motortrend India Staff   |   06 September,2011

A struggling Fiat is finally set to move beyond dealer network of Tata Motors as the company will open exclusive ‘Fiat branded’ showrooms across the top 20 cities to revive sales. While Tata Motors has been retailing Fiat cars through its dealerships as per an arrangement between the companies, Fiat will have exclusive sales showrooms for the first time, perhaps signalling the Italian carmaker’s frustration with Tata’s network.

Rajeev Kapoor, managing director of Fiat’s India operations, confirmed the development and said he expects as many as 55 exclusive Fiat dealerships within 18 months.

The decision comes at a time when Tata group chief Ratan Tata has said the Fiat joint venture needs to be critically examined and Tata Motors CEO Carl-Peter Forster admitted that the company is “not happy” with the growth of Fiat sales. Sales were down 15 percent last fiscal to 21,066 units and have fallen 23 percent in the April-August period this fiscal to 7,874 units.

“However, this does not mean that we are altering the joint venture. The exclusive Fiat dealerships will be in addition to the Tata-Fiat set-up that we already have. Also, the new dealerships for Fiat will be set up by the existing Tata dealers and we are not going to appoint a dealer on our own,” Kapoor said.

While admiting that sales were not going strong, Kapoor said the idea of a separate network also emanated from the fact that space within the existing Tata dealerships was insufficient to house both the brands. “The display area was becoming crowded and we needed space to showcase our products properly. The exclusive showrooms will help us do that.”

Fiat and Tata Motors have a 50:50 joint venture - Fiat India Automobiles Ltd - for manufacturing cars and engines for both brands at a factory in Maharashtra. Apart from the manufacturing and distribution tie-up, dealerships also provide after-sales support.

While the companies have refrained from openly speaking about the partnership, the Tata-Fiat JV has been struggling, as Fiat has not managed to gain good numbers and Tata’s performance is also not encouraging. Fiat had hired global consultancy firm Accenture to suggest ways to improve its position in India. It is also opening exclusive company-owned brand stores in major cities to generate more sales inquiries.

Ratan Tata, in a recent interview, said his good personal rapport with Fiat chief executive Officer Sergio Marchionne had not translated to 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.”

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