Italian auto major Fiat has decided to snap the distribution agreement with Tata Motors it entered into six years ago and establish a marketing and sales network under the parent company.
According to a Fiat official the company plans to open 40 dealerships in 20 cities over the next one year.
Both the companies have agreed that,in order to further develop the Fiat brand in India,management control of Fiats commercial and distribution activities would be handed over to a separate Fiat Group owned company. Currently Tata Motors has been managing the distribution responsibility of the Fiat branded products in India through joint Tata-Fiat dealerships.
Our customers were not getting the international feel. There were lot of products and hence congestion at Tata dealerships which was not giving our customers the experience that we sought, said a Fiat spokesperson while highlighting the reason for the move.
The spokesperson also added that the move should also lead to increase in sales of the cars. Fiat and Tata have however decided to continue their manufacturing joint venture under which they produce Fiat and Tata cars in addition to engines and transmissions for both the Indian and export market. It also recently signed a contract to supply its Small Diesel Engine to Maruti Suzuki.
We are happy with the manufacturing joint venture as it is doing very well, said the official.
In its five years of operation,the joint venture has produced around 1,90,000 cars and 3,37,000 powertrains. 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, said a statement issued by the two companies.