TATA MOTORS & FIAT AUTO : JOINING FORCES

Presented by:Ashwin Chati 10BSP1249 Durwa Parab 10BSP1119 Sharmin Alam 10BSP1100 Siddharth Jawale 10BSP1112 Sushmita Bhattacharya 10BSP1232 Yoshita Negi 10BSP0819

CONTENTS
COMPANY PROFILES GROWTH STRATEGY AT TATA MOTORS FINANCIAL PROBLEMS AT FIAT AUTO TM & FIAT AUTO- JOINING FORCES THREATS CANIBALIZATION AND DILUTION PRESENT SCENARIO OTHER INDUSTRY JV EXAMPLES

TATA MOTORS AND FIAT AUTO : JOINING FORCES

COMPANY PROFILE TATA MOTORS PRODUCT VARIANTS LOCAL COMPETITORS

TATA MOTORS
Tata motors has its origins in Tatanagar shops, which was acquired by Tata Sons Ltd. on June 1,1945 From the year 1960 it was referred to as Telco(Tata Engineering and Locomotive Co Ltd) C

( 1945-1973)

(1973-1988)

 Co Started manufacturing HCV in the year 1983 & LCV in the year 1986 In the year 1988 Ratan Tata replaced the chairman PRODUCTS VARIANTS The First utility vehicle under the TATA marquee called the Sierra was launched in 1991 The company entered into a JV with Daimler-Benz for the manufacture of Mercedes Benz passenger cars until the year 2001 They also launched the Safari Indias first SUV in the year 1998

Indian Competitors
During the time of launching of the INDICA the small car market in India was dominated by the MARUTI 800 It forced MUL to lower the retail price of Maruti 800, which made small cars more affordable to the Indian middle class In this way TELCO changed the rules in the Indian automobile by providing options like AC, power steering , alloy wheels etc-only in premium cars It was the clear sign of success with INDICA with 115000 bookings by the year 1999

Financial Records
TELCO was making impressive inroads into the passenger car market ,but in year 2001 saw an record of loss of about Rs. 5 Billon-the first loss in 57 years After this attempt the focused on improving internal efficiencies and restructuring its debts In the year 2002-2003 , TELCO registered a net Profit of Rs. 3 Billion

TATA MOTORS AND FIAT AUTO : JOINING FORCES

GROWTH STRATEGY

Growth Strategy
Going Global In March 2004 Tata motors acquired Korean based Daewoo commercial vehicle business to gain entry into high volume Chinese market. Tata motors launched Indica in Europe as well in South Africa. Tata motors got listed in NYSE in Sep2004. Tata motors acquires 21 % in Hispano carrocera, a Spanish bus manufacturing co. to access its design and technological capabilities.

New Product Initiatives

In 2004 Tata motors launched Indica. The same year it launched improved versions like Indica V2 and the Sumo Victa. At Geneva Motor show in March 2005 they unveiled the Xover, a concept car. In May 2005, Tata motors launched the Ace, a sub-one ton mini truck. Tata motors also launched the Safari Dicor, Indigo SX series and the TL 4*4 ( Indias first sports utility truck) during this period.

TATA MOTORS AND FIAT AUTO : JOINING FORCES

COMPANY PROFILE FIAT AUTO PRODUCT VARIANTS LAUNCH OF FIAT INDIA

FIAT Auto
Fiat came into existence on July 11, 1899 which was established by Giovanni Agnelli. 1st Fiat car manufacturing facility was opened in 1900 in Corso Dante, Italy. By 1911 Fiat group diversified in the production and marketing. By 1925, it had entered the steel, railways, power. Fiat groups auto division used mass production.

Product Profile
Fiat group expanded its operations into Aerospace & Telecommunications. Fiat group purchased Autobianchi & Ferrari in 1967 & 1969 respectively.

Fiat Auto took over Alfa Romeo & Maserati in 1986 & 1993 respectively.
By 1980, Fiat Auto was facing severe from Japanese auto manufacturers. Fiat group accounted for 5% of Italys GDP & was Italys biggest employer.

FIAT India
Fiat group appointed Bombay Motor Cars Agency as the sales agent for its cars in 1905. Fiat group entered into a license & service agreement with PAL to manufacture cars.

Premier Padmini launched in 1968.

FIAL, a wholly-owned subsidiary of Fiat auto was established in 1995. Fiat India launched Siena & Palio in 1999 & 2001 respectively.

TATA MOTORS AND FIAT AUTO : JOINING FORCES

FINANCIAL PROBLEMS AT FIAT AUTO

Financial Problems at Fiat Auto

In late 1990s Fiat Auto was in deep trouble. Reasons of Fiat Auto trouble: Failed to move from small segment cars to larger segment cars. Italians Government decision to withdraw the concessions and subsidies given to the company. Give foreign auto companies free access to the Italian market. Demand for cars started falling in Italy and European countries.

 By 2002 Fiat had a loss of US$ 2.5 billion and market share was down to 28 % in Italy and 7% in Europe. Fiat announced its intention to trim its workforce to cut cost. Sold some of its industrial assets to pay off loans. Fiat group sold its insurance and aviation business. Through the early 2000s Fiat auto saw the entry and exit of 4 CEOs.

 Fiat Auto look towards developing countries like India and China where small and cheap cars were in great demand. Palio was initially very successful but other products like Siena were failed. In the second half of 2005 there were reports that Fiat Auto was considering teaming up with Tata motors.

TATA MOTORS AND FIAT AUTO : JOINING FORCES

JOINT VENTURE BETWEEN TM & FIAT AUTO ADVANTAGES OF JOINT VENTURE

TM & FIAT AUTO- Joining force

Sept 22, 2005 TM and Fiat auto signed MOU. Compatibility issues study Octo. 2005, Giovanni De Filippis- MD of Fiat India

Global existence for TM

Targeted Indian market based on value chain for Fiat

Post MOU
Improved dealer network Overseas operation synergy Vehicle finance by Tata group TM- Marcopolo JV Mid 2006- Paint booth facility sharing Ratan Tata joined Fiat s.p.a Argentinean auto sector study

Advantages
Improved customer service and spare parts availability Customer data sharing(Limited) TACO helped to become cost efficient Technology sharing- two petrol engine- fire Latin American market strategically alliance

TATA MOTORS AND FIAT AUTO : JOINING FORCES

INTERNAL AND EXTERNAL COMPETITORS CANNIBALIZATION AND DILUTION

COMPETITORS
Faced intense Manufacturers Competition from other Automobile MUL planning to invest Rs 32 billion to set up a new car plant and diesel engine production facility. Nissan and Suzuki had entered into an alliance in June 2006 to produce small cars. GM India successfully launched Chevrolet Optra and Chevrolet Aveo. Hyundai planned to launch diesel variants of Getz and Santro. Renault SA formed a 49:51 Joint Venture with Mahindra and Mahindra.

CANNIBALIZATION AND DILUTION

Cannibalization is reduction in sales volume because of introduction of a new product by same producer.
The launch of Indica was one such example. Dilution is weakening the brand through ill judged brand extension. Fiat operations small compared to Tata. Threat from Fiat Petra.

TATA MOTORS AND FIAT AUTO : JOINING FORCES

PRESENT SCENARIO REASONS FUTURE PLAN OF ACTION

Joining Hands
JV will make Fiats premium cars, Grande Punto and Linea at Ranjangaon in Maharashtra Distribution and service of Fiat branded cars in India will be managed by Tata Motors Investment 650 million euro and the plant will employ more than 4,000 people.

Alfredo Altavilla (left), Senior Vice-President, Business Development, Fiat Group Automobiles, with Ravi Kant, Managing Director, Tata Motors, in Mumbai

Reasons
Dealers tend to favor selling Tata vehicles, than Fiat Fiat has not been able to build an aspirational value for its brands to pull more customers Joint venture has reported a loss of 1,214 crores during 2007-2010

Fiat looks at life beyond Tata Motors dealerships

Fiat needs to reinvigorate the brand at the ground level and building its own distribution network gaining brand affinity in the market opening exclusive company-owned brand stores in major cities to generate more sales space with the existing Tata dealerships was insufficient to house both the brands - Rajeev Kapoor, managing director of Fiat's India operations

TATA MOTORS AND FIAT AUTO : JOINING FORCES

SOME JOINT VENTURE ORG. EXAMPLES STRATEGIC OUTCOME

Some Industry JV Examples

Company Audi (Volkswagen) Daewoo (Korea) Fiat Ford Motor Company Honda Hyundai (Korea Mercedes-Benz Mitsubishi Peugeot Volkswagen Joint Venture Partner Franchise (Imported car) DCM Premier Automobiles (PAL) Mahindra & Mahindra Shriram Industries Wholly-owned subsidiary TELCO Hindustan Motors (HM) Premier Automobiles (PAL) Eicher Ltd. Planned Products (Ave. Price) Audi-A4 ($85,000) Cielo ($15K) Fiat Uno 1000 cc ($10,000) Ford Escort, Festiva ($12K) Opel Astra ($22K average) Civic ($18K) Accent Mercedes E220 ($70K) Lancer ($15K) Peugeot 309 ($15K) Golf ($20K)

General Motors Corp. (GM) Hindustan Motors (HM)

Some More Examples

Supplier Joint Ventures

Company Hyundai Skoda Ford

Particulars Export Base for Small Cars. Hub for exports of cars to neighbouring countries Exporting CKDs of Ikon to South Africa & other countries.

Mitsubishi & Yamaha

Maruti Suzuki Honda

Hub for 125 cc Motorcycles.

Exports cars to EU. Hub for two-wheelers exports.

Company Toyota Motors Ford Fiat MRF Ltd.

Particulars Global Hub for Transmission Full Fledged Component Sourcing Team Sourcing Components. Export Tyres To The US

Strategic Outcome
COST REDUCTION EXPORT BASE ENTRY INTO INDIAN MARKET TECHNOLOGICAL KNOW HOW