Tata Troubled By Lack Of Progress In Fiat Alliance

Before Fiat snapped up Chrysler from the US taxpayers for a song, it saw the Indian firm Tata as another logical partner for a long-term alliance. After Tata bought Jaguar/Land Rover, the auto media was awash in rumors that the British brand would share components with Fiat’s Alfa-Romeo brand. When Tata came out with the Nano, there was speculation that Fiat’s dealers in Europe and Latin America could be used to sell the low-cost car, even rumors of a Fiat-branded version were floated. Fiat even tried to sell Tata on one of its notoriously nasty Italian plants. What did surface from Fiat and Tata’s flirtations: a joint venture in India that, by all accounts, is going not well at all. And now, with Fiat distracted by its Chrysler rebuilding project, Ratan Tata is expressing his displeasure with his firm’s Fiat tie-up, telling The Hindu Businessline

I have to admit that so far, the venture with Fiat has not been as active as we had thought… I think that Fiat has to launch more models into the market to keep dealers interested. It also has to look at its cost structure in terms of parts and components. So the joint venture needs to be looked at quite critically and until that happens, it’s not going to be optimised… As far as what else we can do with Fiat, I think Sergio Marchionne and I can really talk to each other. However, at the working level, it hasn’t quite been that way. We have looked at Latin America to do something together, but things haven’t moved as they should have done

To which we say: good luck getting Fiat to sell your low-cost cars in Latin America. The Italian firm was supposed to sell multiple Chryslers in 90% of its Latin American dealers in order to acquire five percent of Chrysler’s equity, but it managed to get Treasury to reduce that requirement to “at least one” Chrysler vehicle (specifically, the Fiat “ Freemont” rebadge of the Dodge Journey) and only 90% of its Brazilian dealers. You’d think Fiat would want to sell vehicles abroad made by a firm it now owns, but apparently it is jealously guarding its Latin American markets from even Chrysler. If Tata thinks he’ll be able to get a better deal out of the notriously tough-negotiating Sergio Marchionne, he’s kidding himself. Meanwhile, with Fiat expanding in Russia and China, India seems unlikely to get many resources from the stretched-thin Italian firm… time for Marchionne to either work his trademark charm, or get ready to add an “I” to the ongoing rethink of the “R” and “C” of his BRIC strategy.

[HT:@dseetharaman, who updates via Twitter “Sergio Marchionne, donning his Fiat hat, says he hopes to meet the head of Tata before summer-end to discuss Fiat-Tata JV.”]