Fiat to part ways with Tata Motors for car sales, Finally!
While the Italian auto major, Fiat has always been desperate in gaining a decent ground in India for the past many years, sales and service has been one of the major hurdle in its growth. Be it its alliance with Premier Automobiles during the 90s with products like Uno, 1100 and 124, its attempt to go solo or its recent alliance with Tata Motors, Fiat has struggled to keep the consumer happy and create a large enough loyal consumer base in the country. However, the company is finally taking the much-needed corrective measures.
As per a joint statement from Tata Motors and Fiat, the duo are ending their distribution agreement, while the manufacturing accord will continue. For the record, the marketing agreement between Tata and Fiat allowed the Italian auto maker to use the Indian firm’s distribution network in the country. However, as per the recent announcement, distribution will now be handed over to a separate Fiat group-owned company which will be headed by Enrico Antanasio.
The reason for such a move is obvious. For the past many months, there has been dissatisfaction both from Fiat's and Tata's end regarding the performance of the JV. In addition, the sales haven't been able to challenge the allegations either. For FY 2011-12, Fiat sold 16,073 units falling by 23.87% as compared to the last fiscal.
To start with, Fiat will encourage the 178 existing Fiat-franchised Tata dealers in 129 cities to build a strong foundation for this future network but it is expected that it will take close to two years to bring this network on its feet. It may be noted here that the company has not shared the exact dates of this transition phase but it is expected that it will start very shortly.
Clearly, it is the need of the hour for Fiat but will these independent showrooms be able to solve its woes in the Indian market? Certainly not alone. The company will also need a more aggressive product line-up to back the dealers. Hopefully, this time Fiat will be able to change the consumer perception. But obviously, it is easier said than done.
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