Fiats move to shrug off Tata faces resistance from within

Written by Ronojoy Banerjee | Ronojoy Banerjee | New Delhi | Updated: Jan 3 2012, 07:56am hrs
Fiat Indias decision to move out of the shadows of Tata Motors and set up separate, exclusive dealerships could face stiff resistance from its own dealer community. As per the plan, the subsidiary of the Italian car major had sought to come up with exclusive dealerships, as part of a new branding exercise, which would co-exist with other Tata-Fiat dealerships.

The company had said that the existing Tata dealers would open two dealerships in different locations. However, FE spoke to a slew of Tata dealers across the country who said that neither does Fiat have the volumes nor the product range to warrant a new dealership. For instance, in the April-December period Fiat Indias sales declined over 28% to 10,875 units compared to 15,185 units in the corresponding period last fiscal.

At present, Fiat, which is a 50:50 joint venture between the Italian company and Tata Motors, sells cars under the roof of the latters dealership. This understanding was reached at by the two companies after forging the joint venture in 2006.

However, last year Fiat India announced that its existing dealers would open a slew of separate Fiat dealerships to boost sales because it felt that Tata cars were getting more importance in the joint showrooms. As per the plan, the company wants 20 exclusive dealerships opened in the country by end of 2012.

We are not going to open a new dealership for Fiat because it just does not make any sense at this point. Let them launch two or three fresh models then we can consider, a Patna-based executive of one of the largest Tata Motors dealerships in the country told FE.

He said that at this juncture Fiat would have to re-invent itself and unveil a new strategy before it can become attractive to consumers and dealers.

Kolkata-based Vinod Aggarwal who also runs a large Tata Motors dealership in the city said, Though existing dealers can only open a new dealership once they get approval from the company I would not open a separate Fiat dealership even if I had the approval.

Similarly, another executive of a dealership based in Mumbai said that typically when a leading original equipment manufacturer wants to expand its dealership base, it uses coercive tactics.

Since Fiat has such low volumes it is nearly impossible that dealers would open a new exclusive dealership for them, he said.

President of Federation of Automobile Dealers Associations Nikunj Sanghi said, For setting up a separate dealership the biggest hurdle for is the high cost of real estate.

An email sent to Fiat India went unanswered.

On Friday, Fiat India would be unveiling its first branded showroom in the capital.

According to sources, the dealership is 100% owned by Fiat India. In September 2011, the companys president and CEO Rajeev Kapoor had told FE that Fiat India was looking to consolidate its current product range by making refurbishments to its existing portfolio of cars. He ruled out any new launch of a fresh model until 2013-14.

Kapoor had also clarified that Fiat was not splitting with Tata Motors, but merely adopting a new strategy. We are not going separate ways. But our approach to the market is being done differently now. We feel that both the brands should be seen differently. The same dealer will have to open two dealerships in different showrooms/locations, he had said.