Tata Motors to shift assembly production

New Delhi: Tata Motors is likely to shift assembly operations of its Indigo sedan to its joint venture partner Fiat’s facility in Ranjangaon from next fiscal.

Both the companies indicated that even for some of the new models of Tata, it could make use of Fiat’s facility to optimise production.

While the company did not specify the reason for the strategy, industry analysts say that the reason could be the fiscal incentives that Ranjangaon facility offers, unlike the Pune plant.

Tata Motors has a plant in Pune from where it makes its cars.

“We are doing limited numbers of Indica from Ranjangaon. But we will roll out our newer models from Ranjangaon beginning next fiscal,” said Mr S. Krishnan, Vice- President, Passenger Car Business unit.

The Tata-Fiat plant has a capacity to produce two lakh cars annually.

Fiat is aiming to sell around 75,000 units in 2009-10, leaving substantial spare capacity.

Fiat India’s Chief Executive Officer, Mr Rajiv Kapur, also confirmed that Tata Motors would make the new Indigo sedan from next fiscal at the Ranjangaon plant.

“The new Indigo sedan will be made at the Ranjangaon plant,” Mr Kapur said at the sidelines of the launch of Fiat’s sedan Linea.

Tata Motors sources engines from the joint venture facility. The plant has the capacity to make 1.3 litre multi-jet diesel engine and a 1.2 and 1.4 petrol engines.

However, industry analysts sounded a note of caution on Tata Motors’ move to produce cars at Ranjangaon.

“Tata Motors could be looking to shift production mainly due to the sales tax exemption that the Tata-Fiat plant offers.

“But there could be added tooling costs that the company may have to incur to make some of their models on the Fiat platform,” said Mr Mahentesh Sabarad, an auto analyst with Centrum Brooking India Ltd.