Tata Motors and FIAT Auto Final Ppt
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Transcript of Tata Motors and FIAT Auto Final Ppt
TATA MOTORS & FIAT AUTO : JOINING FORCES
Presented by:-Ashwin Chati – 10BSP1249Durwa Parab – 10BSP1119
Sharmin Alam – 10BSP1100Siddharth Jawale – 10BSP1112
Sushmita Bhattacharya – 10BSP1232Yoshita Negi – 10BSP0819
CONTENTS
COMPANY PROFILESGROWTH STRATEGY AT TATA MOTORSFINANCIAL PROBLEMS AT FIAT AUTO TM & FIAT AUTO- JOINING FORCESTHREATS – CANIBALIZATION AND DILUTIONPRESENT SCENARIOOTHER INDUSTRY JV EXAMPLES
TATA MOTORS AND FIAT AUTO : JOINING FORCES
COMPANY PROFILE – TATA MOTORSPRODUCT VARIANTSLOCAL 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 India’s 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 ( India’s first sports utility truck) during this period.
TATA MOTORS AND FIAT AUTO : JOINING FORCES
COMPANY PROFILE – FIAT AUTOPRODUCT 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 group’s 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 Italy’s GDP & was Italy’s 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 1990’s Fiat Auto was in deep trouble. Reasons of Fiat Auto trouble:-• Failed to move from small segment cars to larger segment cars.• Italian’s 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 AUTOADVANTAGES 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 networkOverseas operation synergyVehicle finance by Tata groupTM- Marcopolo JVMid 2006- Paint booth facility sharingRatan Tata joined Fiat s.p.aArgentinean 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 COMPETITORSCANNIBALIZATION AND DILUTION
COMPETITORSFaced intense Competition from other Automobile Manufacturers
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 SCENARIOREASONS
FUTURE PLAN OF ACTION
Joining Hands
• JV will make Fiat’s 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. EXAMPLESSTRATEGIC OUTCOME
Company Joint Venture Partner Planned Products (Ave. Price)
Audi (Volkswagen) Franchise (Imported car) Audi-A4 ($85,000)
Daewoo (Korea) DCM Cielo ($15K)
Fiat Premier Automobiles (PAL) Fiat Uno 1000 cc ($10,000)
Ford Motor Company Mahindra & Mahindra Ford Escort, Festiva ($12K)
General Motors Corp. (GM) Hindustan Motors (HM) Opel Astra ($22K average)
Honda Shriram Industries Civic ($18K)
Hyundai (Korea Wholly-owned subsidiary Accent
Mercedes-Benz TELCO Mercedes E220 ($70K)
Mitsubishi Hindustan Motors (HM) Lancer ($15K)
Peugeot Premier Automobiles (PAL) Peugeot 309 ($15K)
Volkswagen Eicher Ltd. Golf ($20K)
Some Industry JV Examples
Some More Examples…
Supplier Joint Ventures
Company Particulars
Hyundai Export Base for Small Cars.
Skoda Hub for exports of cars to neighbouring countries
Ford Exporting CKDs of Ikon to South Africa & other countries.
Mitsubishi & Yamaha Hub for 125 cc Motorcycles.
Maruti Suzuki Exports cars to EU.
Honda Hub for two-wheelers exports.
Company Particulars
Toyota Motors Global Hub for Transmission
Ford Full Fledged Component Sourcing Team
Fiat Sourcing Components.
MRF Ltd. Export Tyres To The US
COST REDUCTION
Strategic OutcomeStrategic Outcome
EXPORT BASE
ENTRY INTO INDIAN MARKET
TECHNOLOGICAL KNOW HOW