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Old 2nd December 2010, 14:56   #1
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Default Will Tata Motors and Fiat ride out the jinx?

An Interesting article by Forbes India. Reveals so much inside information about the TATA FIAT JV and makes a good read.

Source : Will Tata Motors and Fiat ride out the jinx? - Forbes India -


An excerpt:

Quote:
In the car business, automobile dealers form an important part of the business and are considered family by companies. So, a few months ago, when Pune-based BU Bhandari, one of the oldest and most networked car dealers in Maharashtra, quit from Tata Motors, there were clear signals that all was not well with the car company’s business. Bhandari’s showroom sold Tata and Fiat cars but had of late stopped making money.

For the year 2009-2010, the Tata Motors-Fiat joint venture’s losses have increased 39% to Rs. 920 crore from Rs. 698 crore in the previous year. For Fiat, the year so far has been disastrous. Sales of Fiat cars have plummeted from over 2,100 cars in March 2010 to less than 1,700 in September. Market share has declined from 1.17% to 0.83% for the same period and its Ranjangaon plant now lies largely under-utilised. For Tata Motors, which put about Rs. 550 crore as equity in the JV, it seems like an increasingly loss-making proposition.

Last edited by GTO : 6th December 2010 at 16:22. Reason: Please do NOT cut-copy-paste complete articles from other publications. Best to provide an excerpt, and the web link for full information
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Old 2nd December 2010, 15:20   #2
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That's a very interesting article. True that the JV should have a win win situation, however, for FIAT, giving out exactly same configurations of its engines did more harm than good.

At least they are making efforts to sort these issues.

Now FIAT along with the brand stores, they need to open at least a 2 exclusive service centers in the Metros and 1 exclusive service center in the tier 2 cities. To remove the perception of spares problem, keep sufficient stock of all parts at these exclusive service centers (I know, its financially not viable, but that is the price to pay for the mistakes in the past).

The public memory is short which might turn to favorable or even unfavorable.

Its a long and tough way ahead for FIAT and for the JV to click these internal problems should be sorted out with utmost importance.
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Old 2nd December 2010, 15:40   #3
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Its a good read. The JV needs to set their differences apart and work together in the future. Not all Tata dealerships should sell Fiats but only the best. Those select dealerships should be upgraded to a higher level (at least one step up) and should have different theme for Fiat and Tata's display areas apart from separate staff. Aftersales as a whole should be revamped. Tata need to learn from Maruti Suzuki.

With Tata-Fiat dealerships already in place, I would suggest Fiat do this - Introduce new world-class dealerships (by that I mean Sales and service outlets) initially in a few cities and make them the best (Let's call these boutique dealerships). As time passes by, introduce new dealers in other cities and train those staff in the original boutique dealerships. Over a period of five years, this continuous expansion will result in a healthy numner of Fiat only dealerships. The JV, IMHO can be re-written for the benefir of both brands. Fiat deserves better dealers than the Tatas can provide. Afterall, Tata gets world-class engines from Fiat but in return, we dont see world class sales and service in exchange.

Moreover, Fiat needs to devise a new marketing strategy for all their models. Learn from VW. Their marketing has left a deep mark in everybody that will remain planted for several years to come.

Last edited by designersf : 2nd December 2010 at 15:45.
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Old 2nd December 2010, 15:50   #4
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For some reason, I feel a good portion of the failure this JV has met, is FIAT's lack of ability to sell their products. I own a FIAT, and am really happy about the product - so much, that I recommend the car to anyone who asks.

The A-S-S is a big pain, though. Spare parts are never available - they take ages to be sent to the dealer when orders are placed.

On the sales part, I've witnessed sales persons at dealerships clearly dis-interested in selling a FIAT - they often pull you towards TATA Products, more so when TATA products are similarly spec'd as a FIAT.
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Old 2nd December 2010, 15:54   #5
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An interesting article ! The problem with Fiat is that while companies like VW and Nissan are building the brand here , Fiat is still fighting to undo all the negative brand image it gained from the last time.
some solutions to this
1) a good unlimited 4-5 year warranty, zero cost of ownership except fuel charge ! I think Hyundai offer similar one in USA
2) opening fiat only showrooms with testdrives and separate fiat only service bays, waiting areas and managers in tata-fiat service centres, all this in metros atleast.
3)STOP with the ads which tell nothing about the car! Even the T-jet ad was all music and the Car hardly got screen time! . When will they start highlighting the features in the car? The Figo AD was so nice in that it showed the bluetooth features , the space etc! Most people don't even know the Punto comes with a fuel efficient diesel engine. My friends were wondering why i bought a fuel thirsty car like a Fiat ! ( thanks to the negative perception of palio! )

Last edited by amulu10 : 2nd December 2010 at 15:55.
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Old 2nd December 2010, 15:56   #6
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Quote:
Originally Posted by binaiks View Post
For some reason, I feel a good portion of the failure this JV has met, is FIAT's lack of ability to sell their products. I own a FIAT, and am really happy about the product - so much, that I recommend the car to anyone who asks.

The A-S-S is a big pain, though. Spare parts are never available - they take ages to be sent to the dealer when orders are placed.

On the sales part, I've witnessed sales persons at dealerships clearly dis-interested in selling a FIAT - they often pull you towards TATA Products, more so when TATA products are similarly spec'd as a FIAT.
Even I recomment Fiat products and am a huge fan. Even I have personally experienced sales executives luring prospective customers towards Tata models eventhough the customers prefer Fiat. Its like using Fiat models to get people to showrooms and brainwash them to buy Tatas!
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Old 2nd December 2010, 16:02   #7
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IMO this is what Tata motors need with respect to small/mid size passenger cars:
1. A fuel efficient small size 1-1.2 ltr petrol engine churning out atleast 80BHP if not 90.
2. Strict QC.
3. No need of a super cheap car, instead build a quality car, priced neck to neck with the competition i.e Maruti/Hyundai and just retain the rest all USP's viz. Space, comfort and features.
4. If the product is 'all new' give it a new name and don't carry over design cues from the older one. Remember Hyundai till Verna? Their cars looked so different. No family look thing. After all TATA is not Mercedes or BMW!!

As far as Fiat is considered, they really need to work on spares availability at the service centers.
Negatives so far in current Fiat lineup are:
- Interior fit and finish. Surely not up to the mark. I don't see any problem with the material quality.
- FE. Petrol only. Not for me but for majority Fiat petrol cars are fuel hungry.
- Service quality and consistency across the service centers.
- Brand promotion.
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Old 2nd December 2010, 16:03   #8
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Wonderful article which provided great insight on the JV between Tata and Fiat. The cars which Fiat sells in India are good. I think the main reason why they dont sell are

- If I were to buy a Fiat, what I would right now think is about the After sales. At least what I have heard is that the after sales in the TATA dealer ships is decent, not phenomenal. Now, I will definitely think that if I buy a Fiat, I would get secondary importance

- I dont think that a company is interested in selling its cars in India unless they have atleast some dealerships of their own. The average customer would not know the details of the JV. He would just know that Fiat has a deal with TATA to sell and service their cars. So isn't it right if the person thinks that the company is not serious in selling their own cars?

- VW has come into the picture just now and the number of dealerships they have is lesser than Tata. But they have created a market for themselves already. Agreed, they are a great brand, but Fiat is no slouch either, but the fact that VW has invested in India makes the people trust VW more

- Finally, the JV's with which Fiat was associated in the past have bombed badly and hence I think there is an inherent assumption that Fiat in all probability will goof up again
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Old 2nd December 2010, 16:09   #9
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Nice article, The article seems to imply that the Manza is not doing well, but is the second best seller in it's category and within 10% of the Swift Dzire, what more could they want?

Some how the JV may not be doing as badly as incidicated except for the shortfall in Fiat Sales - they need to improve product quality and positioning and marketing to get that revived. GM's total car AMC and assurance method could work for Fiat as well.
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Old 2nd December 2010, 16:20   #10
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@ACM, if I remember correctly, the total you are referring to also includes the older Indigo family, and not just Manza. I wonder how much of this mix is the Manza.

Yes, a very thoughtful article highlighting the issues facing the JV. It would be interesting to see whether the JV will work on these issues and progress forward.
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Old 2nd December 2010, 18:27   #11
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One thing is for sure. Tata's definitely shivering timbers with the Etios and its price round the corner.
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Old 2nd December 2010, 18:32   #12
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When one looks at the FIAT's Travails in India picture, Phase 2 & 3 has the same problems. Labour trouble, delayed deliveries, labour unrest & poor service.

Which according to me is a good sign; which means, no one's complaining about FIAT as a product; all FIAT has to do is to simply focus more on customer, that's all. Well, easier said than done is quite true here, but, in this competitive market, if one has to survive, they NEED to focus on it.

I hope FIAT does that.
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Old 3rd December 2010, 03:04   #13
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I agree with designersf.

Fiat really need to do something on their own to attract customers than leaving the the entire selling part to the TATAs. How can you expect a competitor to recommend your car over theirs.

So, its time Fiat invested some money on exclusive Fiat dealerships, atleast in the major cities. No one has any complaints about Fiat's cars, but the only thing lacking is the public awareness of the new gen Fiat vehicles and this can be changed only by a rather innovative brand building process and exclusive dealerships can help them to an extent.

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Old 3rd December 2010, 11:42   #14
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That's a very good article. Not bashing anyone, but very thoughtfully put. Little OT here, but I'm really looking forward to buy Linea, but looking at current situation, "FIAT axing the their cars and concentrating only on engines" doesn't seem impractical at all. If their analysts come up with some plan, when they can show how FIAT can make more profit by just selling the engines than cars, FIAT might take action on it. So who looks after these cars when they are gone? What happened last time (twice) when they shut their operations?
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Old 3rd December 2010, 11:48   #15
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Quote:
Originally Posted by xPK View Post
but looking at current situation, "FIAT axing the their cars and concentrating only on engines" doesn't seem impractical at all.
Err...FIAT is selling engines to Tata, just thay FIAT doesn't have their own showrooms to sell their cars; but then, they're changing it too right? Did I get something wrong with your question?

Quote:
Originally Posted by xPK View Post
What happened last time (twice) when they shut their operations?
FIAT did come back right? They never lost hope with India right?

Go ahead with Linea, its the best VFM product & most importantly beautiful crafted car
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