Case – HBS: Fiat -- Tata
1 What is Fiat’s current situation in India?
Fiat is an Italian automobile manufacturer based in Turin.
Fiat India in Indian car market is facing the dilemma of poor sales. It had a very small market share in India comparing to other existing automobile competitors. There was a good and long relationship with Tata Motors in Indian so Fiat and Tata were going to have a joint venture (JV) to manufacture passenger cars, engines and transmissions for the Indian and overseas markets. These two companies began to seek for collaboration in early 2005. From the Exhibit 2: Production by Manufacturer, we can see Fiat in 2006 ranked 11 in worldwide auto industry while Tata stood in 21, which had merely Indian market. For Fiat this brand, it had a high brand awareness in India which is a good sign for them want to expand market there and Fiat also had the best diesel engine for small cars.
2 What is the business opportunity in India? Do you think that Fiat needs a partner? In an attempt to lower costs, most major automotive makers had set up factories in emerging markets such as China, India and South America. Because lower production costs were one incentive, experts also suggested that car makers could gain access to growing and fertile marketplaces that is the background for auto manufacture in India. The liberalization policies in 1991 opened up India to new import and export possibilities. To encourage investments, the government launched series of new policies in 1990s to help growing their economics. For vehicle industry, there was total population of 1.1 billion people in India which is an obvious potential opportunity for auto makers. I think Fiat really needs a partner. The trend at that time was all manufacturers with production greater than one million vehicles were involved in one or more alliances with other producers. Automobile manufacturers formed alliances for a variety of factors with the...
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