Fiat in India: Realigning the Joint Venture with Tata Motors




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Fiat

Fiat SpA, based in Turin, Italy, was an engine and automobile manufacturer. With a production output of more than 2 million units, revenue of € 35.88 billion, and a profit of €179 million (in 2010), Fiat was the largest automobile manufacturer in Italy and ranked among the top 10 globally in 2011 (See Exhibit II).

Fiat had had a presence in India since 1905. At that time, it imported the vehicles and sold them through its sales agent – Bombay Motor Cars Agency. Later in 1951, Fiat entered into a license and service agreement with Premier Automobiles (Premier). With the opening up of the Indian economy in the 1990s, Fiat established a wholly-owned subsidiary in India in 1995. It brought the Uno to India, which received the best-ever initial response for a new car in India. However, labor trouble and delayed deliveries soon created an anti-Fiat wave.

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Fiat then entered into a 51:49 JV with Premier and, by 1997, it increased its stake in the JV to 97%. But by the late 1990s, the JV had run into trouble, as Fiat had to rely heavily on its partner for the manufacture and distribution of its models. Without proper product promotion by the Indian partner and lack of dealers and service points, Fiat found that it could not compete with the new entrants. It therefore ended the partnership with Premier in 2004.

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