Tata Motors and Fiat Auto: Joining Forces

India being a major market for small cars, Fiat Auto decided to revive its operations in the Indian market. And the joint venture with TM was a step in that direction. Most analysts were of the opinion that the joint venture would benefit both parties; TM would gain in terms of better accessibility to technology, design, and global markets, while for Fiat Auto, it would mean a larger presence in India, one of the world's fastest growing auto markets, without heavy investments. However, there were others who felt that the joint venture would end in brand dilution and product cannibalization for both parties. Also, with Honda, Toyota, GM, Mitsubishi, M&M/Renault, Nissan, Skoda, etc., chalking out plans to enter the small car segment, especially the premium small car segment, it seemed likely that the TM-Fiat Auto joint venture would face intense competition in the coming years.

Initially, the company produced steam locomotive boilers and later graduated to producing complete locomotives and other engineering products. From 1960 onward, it was referred to as Telco (Tata Engineering and Locomotive Company Ltd.). Telco began production of medium commercial vehicles in 1954. The company gradually grew under the leadership of J.R.D. Tata (Chairman between 1945 and 1973), and Sumant Moolgaokar (Moolgaokar) (Chairman between 1973 and 1988). Telco set up a second factory in Pune in the 1970s. The company started manufacturing heavy commercial vehicles in 1983 and light commercial vehicles in 1986. Telco also increased its exports over the years. In 1988, Ratan Tata replaced Moolgaokar as Telco's Chairman...