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Old 17th August 2010, 09:58   #1
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Arrow Tata-Fiat joint venture drives into profit zone

Tata-Fiat joint venture drives into profit zone
Manu P. Toms

Mumbai, Aug. 15

Fiat India, the 50:50 joint venture between Italian carmaker Fiat and Tata Motors, has reported Rs 22 crore profit for the first quarter against Rs 166 crore loss for the corresponding period a year ago. Revenues doubled to Rs 967 crore from Rs 473 crore. This signals a turnaround in the three-year-old joint venture, given the losses it had accumulated in the past many quarters.

From January 2008 to March 31, 2010, the joint venture had a cumulative loss of Rs 971 crore. The loss for the last fiscal was Rs 272 crore. The Fiat India Automotive Private Ltd (FIAPL) had invested Rs 4,000 crore in Ranjangaon to build a plant with a capacity to make 1.6 lakh units a year. Fiat accounts for 70,000 and Tata Motors, the balance. .

The increased capacity utilisation by both the partners and expanding joint dealerships are helping the venture stabilise production and marketing operations.

Fiat makes mid-size Linea and hatchback Grande Punto and Tata Motors makes Indica Vista and Indigo Manza at Ranjangaon. The capacity utilisation at the plant has been increasing over the years. In the last fiscal, Fiat produced 24,000 cars and this year it hopes to double production, according to Mr Rajeev Kapur, Chief Executive Officer (CEO), FIAPL.

Increasing Sales Network
Fiat's first quarter sales were up 15 per cent at 9,020 units, thanks to increasing sales network that is currently at 170 dealerships covering 130 cities/small towns.


“We are bringing out 90 hp Punto, which will be the most powerful hatchback in the market, during the festival season. The high power version of Linea will also be launched around the same time. This will help us improve volumes,” Mr Kapur told Business Line.

Asked when the company would break even, he said, “We hope to break even by financial year 2011-12.” The company has pinned its hopes on the upcoming small car besides variants of Linea and Grande Punto.

“Going by the performance for the last quarter, achieving breakeven by FY 12 looks quite possible,” said Mr Navin Matta, an analyst with Ambit Capital.

“The plant operation has now stabilised and the marketing expenditure has come down,” he said.

Fiat has another revenue stream in engine production. The company makes 1.3 multi-jet and 1.4 FIRE petrol engine at its powertrain facility at Ranjangaon.

The company exported 35,000 engine units to its parent company Fiat Italy last year.

The performance of Fiat India seems to have enthused the joint venture partner Tata Motors.

Mr Carl-Peter Forster, Managing Director and CEO, Tata Motors, said, “We are looking to strengthen the Fiat brand in India.” He said that the joint venture is looking at expanding Fiat's product range and marketing in the Indian market. Tata Motors' investment in FIAPL stood at Rs 999.54 crore as on March 31, 2010.

Source : The Hindu Business Line : Tata-Fiat joint venture drives into profit zone
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Old 17th August 2010, 14:49   #2
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Thanks for the new MS01.

As a Fiat owner, I must say I am relieved to finally read about some positives from the Fiat-Tata camp. So far Fiat and its owners were receiving a Step-motherly treatment from the Tata dealerships and the sales numbers displayed that too.

Hope Fiat has even bigger plan for us post the break-even next year!
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Old 17th August 2010, 15:05   #3
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FINALLYY..

Tata-Fiat JV is marching towards breakeven, it is good news for us Fiat customers. I just home things get better with new engines coming from fiat, they are here to stay
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Old 17th August 2010, 16:32   #4
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Quote:
Increasing Sales Network
Fiat's first quarter sales were up 15 per cent at 9,020 units, thanks to increasing sales network that is currently at 170 dealerships covering 130 cities/small towns.

“We are bringing out 90 hp Punto, which will be the most powerful hatchback in the market, during the festival season. The high power version of Linea will also be launched around the same time. This will help us improve volumes,” Mr Kapur told Business Line.
Hi, ms001! How's the Punto?

I still FIAT should do this -

Develop exclusive FIAT showrooms. Piggybacking on TATA will not work wonders. TATA showrooms still have to cater to everyone from the NANO to the Safari with the Indica, Indigo, Sumo in between - won't the dealers plug for the car which gives them better margin?

90hp Punto - disappointment. (Much like the two door Carbon and Steel Zen; the retro ZEN was a lemon!). FIAT has to do some serious market survey and finalise its long time plans and strategy.

I have a five year old Palio, and till now am not sure whether FIAT has a strategy for retaining existing customers!?

Like others, I too wish FIAT well!
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Old 17th August 2010, 16:59   #5
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Thank God for TATAs, else we would have to see the back of FIAT!

And many would have never experienced the joy of driving a FIAT!
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Old 17th August 2010, 17:25   #6
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May be off topic, but a little relevant though.

I had been to KHT motors along with my colleague who is looking to buy a premium hatchback. We were attended to at the reception right away without delay and the sales rep started giving us information about the features and the price. However, on digging into the details, the sales rep did not know much about the car technically.

The sales rep was definitely not confident which was very evident. What matters here is proper training and how to emphasize on the strong points of the FIAT brand. So just starting standalone dealerships/service centers will not be adding much to the monthly sales. Having informed sales reps who can actually convert an inquiry into a sale is what matters here for FIAT.

Hope FIAT is reading this and does something about it. Because training the sales and the service folks is far more cheaper than actually investing in developing standalone dealerships and service centers.
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Old 17th August 2010, 18:33   #7
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Quote:
Originally Posted by nkrishnap View Post
May be off topic, but a little relevant though.

I had been to KHT motors along with my colleague who is looking to buy a premium hatchback. ...
Stay away from KHT motors [for both sales & service]. They are good for nothing and they just retained all the staff from Manipal motors.

Visit the Concorde motors in Dairy circle and its worth visiting there though its a long drive from the other side of Bangalore !

Prem.
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Old 18th August 2010, 07:23   #8
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Light at the end of a dark tunnel for Fiat India, at last. Sweet news not only to Fiat India, but also to all owning Fiat products.
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Old 18th August 2010, 10:16   #9
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Quote:
Originally Posted by vrprabhu View Post
Hi, ms001! How's the Punto?

I still FIAT should do this -

Develop exclusive FIAT showrooms. Piggybacking on TATA will not work wonders. TATA showrooms still have to cater to everyone from the NANO to the Safari with the Indica, Indigo, Sumo in between - won't the dealers plug for the car which gives them better margin?

90hp Punto - disappointment. (Much like the two door Carbon and Steel Zen; the retro ZEN was a lemon!). FIAT has to do some serious market survey and finalise its long time plans and strategy.

I have a five year old Palio, and till now am not sure whether FIAT has a strategy for retaining existing customers!?

Like others, I too wish FIAT well!
my punto is fit and fine i agree fiat needs exclusive showrooms and a low end car to replace the palio, with right pricing they could still sell good numbers
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Old 18th August 2010, 12:15   #10
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Fiat needs to open up more showrooms and exclusive service centers.

The 3-5 lac segment is where all the action is happening and Fiat should find a replacement for the Palio asap. The best choice would be to launch a practical hatch like Panda.
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Old 18th August 2010, 12:27   #11
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Asked when the company would break even, he said, “We hope to break even by financial year 2011-12.” The company has pinned its hopes on the upcoming small car besides variants of Linea and Grande Punto.
Did anyone spot this? What upcoming small car?? Does anybody have any news on this? This is the first time I'm reading about some new launch.
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Old 18th August 2010, 12:32   #12
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Quote:
Originally Posted by harishnair View Post
The best choice would be to launch a practical hatch like Panda.
Don't know if the article which ms001 posted has given any pointers on this. But something like that would be welcome.

BTW, does anyone know how much FIAT made by selling their Mumbai plant? A lot of money, I am sure. That was one investment which they would have earned more than expected

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my punto is fit and fine i agree fiat needs exclusive showrooms and a low end car to replace the palio, with right pricing they could still sell good numbers
Can you summarize your after sales and service experience so far, ms001?

Why? Because, this is also a lucrative business segment for all auto majors.
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Old 18th August 2010, 17:01   #13
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Originally Posted by PhrozenFire View Post
Asked when the company would break even, he said, “We hope to break even by financial year 2011-12.” The company has pinned its hopes on the upcoming small car besides variants of Linea and Grande Punto.
Did anyone spot this? What upcoming small car?? Does anybody have any news on this? This is the first time I'm reading about some new launch.
All you know, that might just be the Panda.

Its good to know the JV gaining momentum. IMO a scenario where FIAT has exclusive dealerships in the tier 1 cities and joint dealership for tier 2 and 3 cities would have been ideal for FIAT.
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Old 18th August 2010, 17:24   #14
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Quote:
Originally Posted by PhrozenFire View Post
The company has pinned its hopes on the upcoming small car besides variants of Linea and Grande Punto.
Did anyone spot this? What upcoming small car??
Quote:
Originally Posted by atrisarkar View Post
All you know, that might just be the Panda.
Oh! I interpreted it as a new car. Because, Panda is an existing model and thought that they will simply mention that they will launch their models from existing range....
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Old 18th August 2010, 17:41   #15
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there were some rumours and posts to the effect that Fiat was contemplating launching the new uno in India. maybe that is the small car they are referring to.
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