Tata Fiat

1340 Words6 Pages
Tata Motors and the Fiat Auto: Joining Forces
Tata Motors (TM) and Fiat Auto S.p.A (Fiat) are large auto manufacturers. It is described as the transformation of TM from a commercial vehicle manufacturing company to a leading passenger car company in India, and its forays into global markets. The case details the growth of Fiat, the problems the company faced, and the strategies it adopted to tackle these problems. It discusses the alliance between the two companies, and the benefits and costs from the alliance for each company.
The fiat Group’s association with the Indian automobile market began in 1905 when it appointed Bombay Motor Cars Agency as the sales agent for its cars in India. In the 1950s, the Fiat Group entered into a
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Such problems had an adverse impact on the company‘s image, and it struggled to compete effectively in the Indian automobile market. The alliance with TM was expected to improve its dealership network and customer service without the company having to make significant investments. The goodwill enjoyed by TM, and the company‘s reach were expected to improve Fiat‘s image in India. Through the alliance, Fiat India also planned to source spare parts for its vehicles from TM. The Tata Group was a cost effective supplier of auto components and had several manufacturing companies under the TACO Group63. Fiat Auto also had plans to increase the level of component sourcing for its overseas operations from India to US$ 10 million in 2006. Component sourcing was expected to be a major area of cooperation between the two companies.
According to auto analysts, while the alliance was expected to cut manufacturing costs for Fiat India (since the manufacturing at the Ranjangaon facility would use the cost efficient production processes of TM), TM was also expected to improve efficiency. Though TM was a force to reckon with in the diesel passenger car segment of the Indian auto market, it did not possess the
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