Fiat, Tatas all set to formalise deal
The Times Of India — November 18, 2005

The global alliance between Italian carmaker Fiat and Tata Motors is all set to be inked in a few days. A high-profile delegation led by Fiat group CEO Sergio Marchionne is expected to visit the city to sign the agreements with Tata group chairman Ratan Tata. In September, Fiat and Tatas signed an MoU to explore areas of cooperation in the passenger car segment. Sources said that the seeds for the alliance were planted in March at the Geneva Motor Show where Ratan Tata ran into Sergio Marchionne.

They then decided to explore the possible areas of cooperation as both stood to gain from complementary strengths. Fiat's Indian operations are struggling after the company failed to establish a good distribution and service network for its cars. Tatas are in need of newer engine technology, especially for its diesel cars. A team headed by Fiat India managing director De Filipis Giovanni was formed to evaluate the feasibility of the alliance.

Apart from joint product development, manufacturing and marketing for India and Southeast Asia, the alliance includes setting up manufacturing facilities for engines and auto components in India. "Fiat is looking at India as a sourcing hub for auto components and engines for its global operations and this forms a core part of the alliance with the Tatas,'' sources said.

Tata Motors will get a breather through access to Fiat's advanced diesel engines. "From January 1, 2006 the Euro IV norms will be implemented in Europe. This will restrict exports of Tata vehicles as currently Tatas don't have an Euro IV engine. Therefore, it was imperative for the domestic automobile major to enter into an alliance which would provide the requisite technology,'' an industry expert said.