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Tata, Fiat eye more cooperation

The areas of cooperation may include co-production, co-development and sharing of technologies.

india Updated: Mar 08, 2006 12:45 IST

Tata Motors Ltd said on Monday it was exploring areas of cooperation with Italy's Fiat apart from joint dealerships to help gain an edge in an increasingly competitive market.

These areas may include co-production, co-development and sharing of technologies, as well as replication of the model in overseas markets, an official said.

"Discussions are on to explore other areas of cooperation, for which the feasibility is being established," said Rajiv Dube, senior vice president of Tata Motors.

Fiat has also said it may source auto components from India, as the group tries to pull back from its worst-ever crisis by launching new models, through alliances with other car makers and production in low-cost countries.

A joint dealership, launched on Monday, will have 44 outlets in the country. More dealerships will be added as other areas of cooperation are firmed up.

The two companies had agreed in January to share dealer networks in India, which would help deliver cost savings.

"We are looking to establish quick gains, though it is too early to quantify what the cost savings will be," Dube said.

Shares in Tata Motors were up nearly 4 per cent at Rs 938.90, off a peak of Rs 941 in a firm Mumbai market.

The joint dealership network, which covers 11 Indian cities, already addresses 70 per cent of the market that Fiat is present in, said Giovanni de Filippis, managing director of Fiat India.

"This is just a first step towards further cooperation," he said.

Fiat is the smallest in the Indian car market, where 11 main players are led by Maruti Udyog, Hyundai Motor and Tata Motors.

Fiat has a plant in Kurla, a Mumbai suburb, with an installed capacity of 60,000 cars a year and a second plant in Ranjangaon, also in Maharashtra. Activation of the plant will depend on whether a ramp-up in production is required, Filippis said.

An excise duty cut on small cars in the federal budget for the fiscal year beginning April 1 has prompted price cuts by the top three players and will lead to greater demand for small cars.

Fiat also competes in the segment with the Palio hatchback.

First Published: Mar 06, 2006 15:14 IST