Tata set to enter new phase in cars with VW alliance

As Tata Motors gears up to enter a new phase of its car business with Volkswagen, it remains to be seen if this will impact its existing alliance with Fiat. The two have a manufacturing partnership at Ranjangaon near Pune, which kicked off a decade ago when the Italian automaker was keen on rebooting its innings here.

The duo had in fact include joint marketing as part of the business model but this did not quite yield the desire results and they decided to carry out retail on their own. Today, with VW entering the picture, it is not entirely clear what the road ahead for Tata-Fiat alliance. Perhaps the show will go on uninterrupted unless the two companies decide that it is too awkward to continue in the new scheme of things.

In the event that happens, Fiat may be more inclined in taking charge of the Ranjangaon facility, which is getting set for the launch of the Jeep Compass towards the third quarter of this year. The company will be hoping that the compact SUV will finally bring about a change of fortunes in its India outing.

Ranjangaon was the initial choice for Fiat way back in the 1990s when it had decided to set up shop here but circumstances prompted a change in location where it acquired Premier Auto’s business in Kurla near Mumbai. While there were a series of setbacks here even while some products promised the moon, the problem was aggravated with headquarters in Turin grappling with its own set of challenges.

The tie-up with Tata Motors was prompted by a joint desire to start a new phase except that the retail part of the plan just did not work. Fiat has been setting up its own network and ramping up the number of dealerships is critical especially with the Compass set to debut in the coming months.

From Tata Motors’ point of view, the VW alliance comes at a time when it is all set to enter a more promising growth phase in cars. A new sub-brand, Tamo, has been created to pave the way for niche mobility solutions where the costing structure will be easier to handle while numbers will be limited. The RaceMo unveiled at the Geneva Motor Show is the first product of this initiative with many more set to follow.

Beyond Fiat, Tata Motors also attempted an alliance with Peugeot over 15 years ago to produce the 307 here but the plan was subsequently shelved. It was some years prior to that the company signaled its intent in cars with the Indica that was touted as the first challenger to Maruti’s dominance in the compact segment. The Nano was the next big headline grabber but fizzled out.

The acquisition of Jaguar Land Rover was Tata Motors’ truly big statement in the global car space. If things do go according to plan with VW, the sky could be the limit except that it will require a great deal of effort to work jointly together and get over the initial glitches in compatibility.

The German carmaker attempted its India entry through a global equity alliance with Suzuki but the relationship soured rather quickly before ending in a divorce. The Japanese small carmaker has now signed up with Toyota to explore a more profound partnership while its former German ally is seeking to crack the code of the subcontinent through its alliance with Tata Motors.

By the end of the day, every company is pulling out all stops to stay relevant in the world’s most competitive car market, which is also on its way to becoming the third largest by 2020.