OUR BUREAUS DELHI | MUMBAI
Close on the heels of Fiat’s assertion that its partnership with Tata Motors will continue with the terms revised, the Italian car major has decided to open its own distribution network in India as the joint dealership with Tatas failed to deliver.
The company will open 55 independent showrooms in 20 cities in the next one and half to two years, Rajiv Kapoor, chief executive officer, Fiat India, told reporters on the sidelines of an industry event. “Having our own showrooms should help boost sales to a considerable extent,” he said.
One of the major problems for Fiat in India has been the fact that for cars sold through Tata’s network, dealers tended to favour Tata rather than Fiat vehicles.
Fiat has identified 20 cities across India where the existing Tata dealerships will open separate showrooms for Fiat cars. The Italian car major will continue to sell cars through Tata dealerships as well.
Last month, Ratan Tata had said that both Fiat and Tata Motors are having a relook at their 50:50 joint venture partnership to see if it could be made more realistic. While admitting that the contractual relationship had suffered losses, Tata Motors chairman had said that, “Assumptions in terms of volumes didn’t work out, more so for Fiat than for us.” Fiat’s chief executive Sergio Marchionne had said that the terms will change but the project will keep going ahead.
Fiat also plans to open special boutique showrooms called Fiat Cafe in Delhi and Pune to further promote its brand in the country.
Failure to build brand affinity has also been one of the major issues that kept Fiat from pulling more customers. In the year ended March, Fiat sales declined 15% yearon-year to 21,112. This compares with 29% year-on-year growth in local car sales to 2.52 million vehicles last fiscal.
Fiat will discontinue sales of its products under the Tata roof and makes plans of establish their own showrooms
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Speaking to reporters here on the sidelines of the Automotive Component Manufacturers Association's (ACMA) annual summit here, Fiat India President and CEO Rajeev Kapoor said the same dealers that were engaged by the Tata-Fiat joint venture will now open separate showrooms for Tata and Fiat-brand cars.
"Fiat cars will now be sold separately and independently," Kapoor said. He said in about one-and-a-half to two years' time, Fiat's independent showrooms would be present in 20 cities. "Also, we are opening two Fiat cafes, one each in Delhi and Pune, for promoting the brand by bringing 'Italian-ness'," he said.
As part of a 50:50 joint venture agreement signed in 2007, the two companies had agreed to a joint distribution network and back-end support system, besides co-manufacturing of products at Tata's Ranjangaon facility, near Pune. The relationship had come into question as Fiat cars were unable to attract sales.
In an interview published in a report by market research firm JD Power, Tata Group Chief Ratan Tata had said the joint venture has not been as active as planned and the association needed to be critically examined to optimise its potential.
In August, just 1,069 Fiat cars were sold in the country, whereas 16,829 Tata cars were bought by consumers