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Old 2nd May 2012, 21:06   #1
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Default Fiat revvs away from Tata dealerships. To set up its own distribution network



Fiat sold a mere 300 Lineas & 700 Puntos in April 2012. Things haven’t been too different in other months either. Sales figures for the Italian brand remain woeful, even when competitors such as the Swift are grossing 20,000 units a month.

Now, Tata-Fiat have agreed that Fiat’s dealer & distribution responsibilities will no longer be handled by Tata, ending their 6 year old distribution alliance. Instead, the distribution will be handed over to a separate Fiat-Group company. Tata-Fiat jointly stated this was necessary "to provide greater focus on the Fiat brand”.

Fiat cars will no longer be sold in Tata dealerships, once the dedicated Fiat outlets have been set up. Fiat said that it will make offers to existing Tata-Fiat dealers for the new dealerships. Fresh applications from dealers of other brands, and first-timers, will also be considered. There is a fair chance that the company will introduce models from the Chrysler range, including Jeep & Alfa Romeo cars; this could serve as a carrot for potential dealers.

Announced in 2006, the Tata-Fiat joint venture also encompasses manufacturing activities located in Ranjangaon, Maharashtra. The manufacturing plant produces Fiat & Tata cars, in addition to engines and transmissions for both, the Indian and export markets. The facility also supplies diesel engines to Maruti Suzuki. It will continue with these manufacturing activities as they are outside of the new distribution agreement, and will supply cars and powertrains to Fiat and Tata.

Challenges:

- It is pertinent to note that Fiat did have its own dealer network a decade ago. That didn't do anything for their sales then. A large number of dealers deserted the brand due to its dismal market performance.

- Was distribution the real problem? How does Tata sell 20,000 - 30,000 cars each month from the same dealers?

- Does Fiat have the products that the mass market wants? How many new, relevant products does Fiat have in the pipeline? Each month, the competition brings newer, fresher cars to the market.

- The competition has only become fiercer, with some formidable brands such as VW & Nissan strengthening their Indian operations. Then, there are existing manufacturers such as Hyundai, Toyota, Ford & Chevrolet who have upped their game. Does Fiat have the product, aggression and budget to compete, or is it going to bring a knife to a gunfight? If Fiat couldn't compete when there were only Maruti & Hyundai to contend with, how will it handle the brutal marketplace of today?

- As much as Fiat wants to start "afresh", fact is, the brand simply cannot. The baggage of yesteryear mistakes will haunt them, and the company's reputation in the consumer's mind remains negative. How will the market react to the nth “Fiat comeback”? What is different this time around?

- How many entrepreneurs would be willing to invest crores of rupees in a Fiat dealership? Wouldn't they rather invest in a growing brand (such as VW & Nissan) or an established one (Maruti, Hyundai et al)?

Ironically, some existing Fiat owners report that they are actually satisfied with the after-sales quality at Tata dealerships. They have a right to be concerned about what happens next.

Last edited by GTO : 3rd May 2012 at 09:14.
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Old 2nd May 2012, 21:09   #2
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Default Re: Fiat revvs away from Tata dealerships. To set up its own distribution network

Great update GTO.

This is good news to many Fiat fans who love the cars but didnt opt to buy them due to the bad after sales service.
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Old 2nd May 2012, 21:21   #3
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Default Re: Fiat revvs away from Tata dealerships. To set up its own distribution network

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Originally Posted by GTO View Post
Ironically, many existing Fiat owners report that they are actually satisfied with the after-sales quality at Tata dealerships. They have a right to be concerned about what happens next.
Just yesterday I was talking to one of my friends who owns a used Palio S10. (more than 6 years old now). His primary concern was availability of spares. He gets nervous with the thought of getting his car serviced from TASC & was asking me the details of the private garage from where I am getting my car serviced.

I am not sure whether the above is a good news or bad news for the existing & prospective Fiat customers, only time will tell.
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Old 2nd May 2012, 21:24   #4
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Default Re: Fiat revvs away from Tata dealerships. To set up its own distribution network

I was happy that if ever I would chose to buy a fiat (Which is very close to my heart), the TATA FIAT dealership's service center is just 40 steps away and the dealership 10 kms away from my place. But after this news, I am not sure whether any one would sell the Fiat in a small town like mine. This is a major drawback, at least for customers of small towns and the company (Fiat). It will lose many buyers of these type of cities.

On the other hand, It may provide a distinct Identity to the brand and may work in favor of it, provided they learn from mistakes and take every step very cautiously. The product line-up, availability of spares, good technicians and service experience.. everything should fall in place.

Last edited by Blow Horn Ok : 2nd May 2012 at 21:35.
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Old 2nd May 2012, 21:28   #5
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Default Re: Fiat revvs away from Tata dealerships. To set up its own distribution network

Couple months back when i let go of my Adventure i did think for a moment to retain the car but with this news has confirmed that i made a good decision.

Also i was pretty close in picking a Punto and lucky i dint do that!

last few months almost all dealership were facing spares issue, i dare to think how this will be going forward, esp for the old cars.

I think its going to be downhill for the Fiat from now on, sales may drop drastically!
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Old 2nd May 2012, 21:28   #6
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Default Re: Fiat revvs away from Tata dealerships. To set up its own distribution network

Thanks GTO for the update. Once again Fiat has left the owners in the lurch - I have lost count of it. As you rightly said, the baggage is heavy and Sergio Marchionne himself need to prove himself here in India. Hope for a turn-around, as always!
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Old 2nd May 2012, 21:31   #7
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Default Re: Fiat revvs away from Tata dealerships. To set up its own distribution network

Interesting move.
The solution seems outright wrong and I am not even sure that the real problem is even understood correctly by Fiat.
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Old 2nd May 2012, 21:32   #8
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Default Re: Fiat revvs away from Tata dealerships. To set up its own distribution network

I think it is time to kill the brand name FIAT. Do what GM did, kill Opel and bring Chevy; Kill FIAT and bring in Chrysler/Jeep/Lancia brands. Have a low cost model like Datsun.
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Old 2nd May 2012, 21:38   #9
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Default Re: Fiat revvs away from Tata dealerships. To set up its own distribution network

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Originally Posted by GTO View Post
There is a fair chance that the company will introduce models from the Chrysler range, including Jeep & Alfa Romeo cars; this could serve as a carrot for potential dealers.
But, new brands will probably mean separate dealerships and hence more investment. I'm not sure this can serve as a carrot to potential dealers.

Quote:
Originally Posted by GTO View Post
- Does Fiat have the products that the mass market wants? How many new, relevant products does Fiat have in the pipeline? Each month, the competition brings newer, fresher cars to the market.
Good point. As much as I love my Punto, I do think it's "dated" in the interior. The exterior looks are timeless. Fiat needs to get update the interiors of Linea and Punto. Fiat also needs to get a more mass market car than the Punto to the market.

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Ironically, many existing Fiat owners report that they are actually satisfied with the after-sales quality at Tata dealerships. They have a right to be concerned about what happens next.
Count me in that group. I'm pretty happy with the service I am getting from the Tata dealer. I hope the same dealer will start a Fiat dealership and the technicians move to the new dealership.
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Old 2nd May 2012, 21:39   #10
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Default Re: Fiat revvs away from Tata dealerships. To set up its own distribution network

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I think it is time to kill the brand name FIAT. Do what GM did, kill Opel and bring Chevy; Kill FIAT and bring in Chrysler/Jeep/Lancia brands. Have a low cost model like Datsun.
Have to agree, the brand 'Fiat' has no appeal in the market whatsoever!!
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Old 2nd May 2012, 21:43   #11
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Default Re: Fiat revvs away from Tata dealerships. To set up its own distribution network

Hmm... now this is some disturbing piece of news.

I am pretty happy with the service I get at my local Tata-Fiat dealership. I rate them a high 8 on the surveys after each of my visit there. But there are times you have to be adamant with them to show them you mean business and get the work done. That aside, service is pretty satisfactory.

Now with this move, several questions come up. Primarily - How far and few will the Fiat dealerships be? It's a chicken and egg story really. Fiat sells 1000 units a month. Should I (as Fiat) go ahead and setup 20 dealerships across India. Or 30, or 50 maybe. I don' know. I just sell 100 units. But then, if I don't setup more independent dealerships, how can I sell more cars? So on and so forth... Get the drift?

I guess as Fiat owners, we will need to wait and watch very closely.

As for Fiat India (if you are reading this) - take the next 3-4 steps very carefully. These steps will make or break your market in India forever (i guess they were lucky to get a second chance. And don't flame me for saying this. I am a Fiat owner for the past 6 years )
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Old 2nd May 2012, 21:50   #12
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Default Re: Fiat revvs away from Tata dealerships. To set up its own distribution network

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Have to agree, the brand 'Fiat' has no appeal in the market whatsoever!!
IMO its not about the name. Its about molding self to local environment, satisfying customers and build loyalty.

I guess most of the market duds are great cars but their fate is destroyed by the parent company. Timing/ Pricing/ Quality Servicing/ Quick solution to customer grievances/ Distribution/ Word of mouth publicity (+ve or -ve) are the things which play a vital role in success/faliure of a car.
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Old 2nd May 2012, 21:52   #13
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Default Re: Fiat revvs away from Tata dealerships. To set up its own distribution network

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Great update GTO.

This is good news to many Fiat fans who love the cars but didnt opt to buy them due to the bad after sales service.
I was one of them.

That said, i echo iceman7's concern. They will REALLy have to pump in their money (and they should have done that long back!) to support the dealers and help them stand.

Instead of investing in their dealers and supply chains, they have invested in fiat caffe and suchlike sophisticated stuff that means nothing to the average buyer.
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Old 2nd May 2012, 21:52   #14
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Default Re: Fiat revvs away from Tata dealerships. To set up its own distribution network

Himanshu,

I have a feeling that the old love will kindle again. Fiat has just agreed to supply MJD engines to Premier and Premier is in the process of setting up at-least 200 PASS units. Given that, I guess Fiat doesn't loose anything.
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Old 2nd May 2012, 21:56   #15
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Default Re: Fiat revvs away from Tata dealerships. To set up its own distribution network

Great news GTO.

I think this is the right step from Fiat. They had to do this to survive in Indian market.

It is a way of Fiat telling its customer that we care and we are here for you.
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