Tata Motors & Fiat to set up Rs 3,000 crore joint assembly line to manufacture SUVs

NEW DELHI: In what may mark a major partnership in the auto sector, Tata Motors and Fiat are planning to set up a joint SUV assembly line, reported ET Now. According to ET Now, the two auto majors will jointly invest around Rs 3,000 crore for the assembly line.

The capacity of the new line is expected to be around 1 lakh units. "While Tata Motors will look to manufacture its Q501 and Q502 SUVs from the line, Fiat is expected to use it for its Jeep models," the channel reported.

The assembly line is likely to come up in Fiat's Ranjangaon unit, where the auto company already has a 50:50 manufacturing joint venture with Tata. The Ranjangaon unit rolls out Tata's Zest and Bolt and Fiat's Linea currently.

The move is also likely to be a major one, because Fiat and Tata Motors had a marketing JV split some years ago. Italian carmaker Fiat Group Automobiles SPA's distribution arrangement with Tata Motors came to an end on March 31, 2013. Some experts believe that Fiat's decision to discontinue the marketing JV with Tata Group was a mistake.

Meanwhile, car sales grew for the second straight month in May, though at a moderate rate of 7.7 per cent, compared with 18 per cent in April, and the industry is pinning its hopes on a normal monsoon and softer interest rates to help boost demand.

According to data released by the Society of Indian Automobile Manufacturers (SIAM), 1,60,067 cars were sold in May. While the growth was largely led by the Maruti Suzuki, Hyundai Motor and Tata Motors, which after two years of decline now seems to be on a recovery path, sales at others like Mahindra & Mahindra, Toyota, Nissan, General Motors and Ford Motor declined last month. Of the 16 major carmakers in India, nine posted lower sales in May.

(With inputs from ET Bureau)