The joint venture among the India based automakers has done some real magic in the automobile world. It isn’t just helping to augment the growth graph of automobile market but is also favorable for the players who are working hand-in-hand. It isn’t new for us to know about the joint venture among the Fiat India, Maruti Suzuki, and Tata Motors since Fiat already supplies a huge numbers of engines to Tata Motors and Maruti Suzuki.
The three automakers signed a new agreement for the supply of engines. Previously, Maruti Suzuki procured 1.3-liter multijet engines from Fiat, but looking at the future-based roll out plans, the company plans to procure 1.5 Lakh more engine units for its vehicle such as Vitara Brezza, DZire, Ciaz, and Ignis from the Fiat.
Similarly, Tata motors have also signed the deal to purchase 70,000 units of 2.0-litre MultiJet diesel engine. This 2.0-litre MultiJet diesel engine will be used to power the Land Rover architecture-based SUV Q501 and Q502, which is under development phase. Similar engine will be installed in Jeep Compass that is owned by Fiat.
The automobile industry believes and follows an opinion that out of ten models only 2-3 models succeed in the market. So, deciding sharing engines and platforms is profitable and helps to give out quick returns on investment that are made.
The trio deal also attracts attention towards Tata Motors that has already signed ‘Memorandum of Understanding’ with Volkswagen Group. As a result, both automakers may share the engines and platforms.
Focusing on the estimated units that Fiat needs to deliver (as per the deal). Fiat India is planning to invest in its Ranjangaon plant to boost the production rate of the diesel engines. Owing to increased load of production of Fiat-owned Jeep Compass and Tata’s Nexon SUV, it is reported that this plant will run out of capacity by 2018. The plant is a joint venture among Fiat and Tata and the currently Fiat Punto, Linea, Tata Bolt, and Zest is manufactured here.
In total, Fiat India will supply 2.2 Lakhs diesel engines to Maruti Suzuki and Tata Motors.