Tata Motors Looking to Use Fiat Plant

By Reuters Posted 11 July 2006 @ 08:53 pm EET     Print     Reprint     E-Mail     Comments

MUMBAI (Reuters) - Tata Motors Ltd. is looking at the possibility of joint manufacturing of cars at Italian car maker Fiat's plant in Ranjangaon in western India, a senior company official said on Tuesday.

The two companies, which launched joint dealership operations in India in March, said at the time they were exploring other options.

The two were looking at the option of developing products jointly and exchanging products, Chairman Ratan Tata said on Tuesday.

The agreement between Fiat and India's number three car maker also envisages technology for engines and components, he said.

"It is a broad-based agreement which will develop based on needs, rather than contractual obligations," Tata said at the annual shareholders' meeting.

The two companies are still studying these options, he said, and the deal may extend beyond the Fiat brand to brands like Alfa Romeo, Maserati and Ferrari.

Fiat has the smallest share in the Indian market for passenger vehicles, which is expected to nearly double to 2 million units by 2010.

Fiat has a plant in Kurla, a Mumbai suburb, with an installed capacity of 60,000 cars. Its India head said in March the Ranjangaon plant -- which has an installed capacity of 100,000 cars -- would be activated if a ramp-up was required.

Fiat also has alliances with PSA Peugeot Citroen and Ford Motor Co. aimed at cutting production and distribution costs in a highly competitive industry.

Analysts say Tata and Fiat may be eyeing an arrangement similar to the one between Suzuki Motor Corp. and Nissan, which entails production of a new compact car by Suzuki for Nissan in India for sale in Europe.

Nissan also separately plans to consign production of a car to one of Suzuki's factories in India.