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. India
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 license agreement with India-based Premier Automobiles Ltd. (PAL) to manufacture its cars. Fiat Auto formally entered the Indian market in 1997 through a joint venture with PAL. The joint venture would benefit both parties; TM would gain in terms of better accessibility to technology, design, and global markets, while for Fiat Auto, it would mean a larger presence in India, one of the world‘s fastest growing auto markets, without heavy investments. Also, with Honda, Toyota, GM, Mitsubishi, M&M/Renault, Nissan, Skoda, etc., chalking out plans to enter the small car segment, especially the premium small car segment, it seemed likely that the TM-Fiat Auto joint venture would face intense competition in the coming years. Fiat’s Benefits in Partnership
The Fiat Group‘s auto division used mass production to keep production costs low. By the late 1950s, the Group had set up several new manufacturing plants abroad for automobiles as well as for farm machinery. In the 1970s, the Fiat Group‘s numerous operations were spun off as independent companies. In 1979, the automobile division of the Group (consisting of Fiat, Lancia, Autobianchi, Abarth36, and Ferrari) was incorporated as an independent company called Fiat Auto S.p.A. By the...
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