The nature and expectations of the JV: What Tata And Fiat expected from the JV?
In march 2008; Tata and Fiat signed a MoU with the government of Maharashtra state to double the investment at Ranjangaon plant that was built to manufacture engines to Tata and Fiat. The additional investment was meant to increase the production capacity to 200,000 cars and 300,000 engines per year, although there was no decision made on how this production should be divided between them.
After a while, Fiat started thinking about using the JV to manufacture vehicles for right-hand drive markets in Australia, Asia, and Africa, hoping to boost the sales in these markets. Potentially, up to 10% of the company’s total exports could go to these markets. And the 1st step toward this segment is to launch a full-fledged R&D unit to undertake the design of these vehicles to that market.
Later on, Fiat decided to risk introducing its premium luxury models to India. Such as; Alfa Romeo, Maserati and Ferrari and they started their discussions with Tata to gain their support in the distribution of these models since Tata has a wide dealership network in India.
In March 2008, Tata finalized the purchase of JLR brands from Ford. Fiat viewed this agreement as an opportunity to establish its presence in US market since it was very eager to establish its brand in Us market and it expressed its intention to Tata to manufacture the rear-wheel drive architecture for Jaguar and land Rover cars.
In Jan 2009, Fiat and Chrysler announced their intention to form a global alliance. Fiat viewed this deal as an opportunity to bring its own automobiles to the US market. on other hand, Tata viewed this acquisition as an opportunity to increase its global presence and planned to sell its nano cars in US. At the same time, it started to think about redesigning its nano cars to meet US standards.
Finally, Fiat was very optimistic of this JV that Fiat’s COO saw India as one of the most important...