Tata gears up for retail drive with Fiat

by 25 Apr 2006

The Fiat Palio will continue to be manufactured at its existing facility in Kurla, said Ravi Kant, managing director of Tata Motors, at a recent press meet in Mumbai to announce the company’s third quarter results. The petrol version of the car will be sold alongside Tata's passenger car range through a network of 25 dealers across the country, added Rajiv Dube, senior vice-president (manufacturing and commercial – passenger cars). Fiat India has a little over 40 dealers and some of them will be roped in for this initiative along with Tata Motors’ own fraternity.

It is not clear, though, how the modalities of manufacturing will work out eventually. There have been unconfirmed reports that Tata Motors will be in charge of the entire vendor sourcing programme as Fiat India does not have a team in place for this purpose. In the process, Tata’s could take up the manufacturing responsibilities of the Palio in addition to the retail effort. If this were to happen, Fiat India will logically be paid for use of its facility (in its capacity as a lessor) and also share the profit margins on sale.

Of course, there is no indication of the number of cars that will be produced at Kurla and whether Tata Motors will use facilities like the paint shop for its own vehicle range. Given that it has tremendous capacity constraints at its Pune plant, this is a route that is likely to be explored.

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