MUMBAI (Bloomberg) -- Fiat and Tata Motors may be headed for divorce after the two carmakers ended a deal this month that had allowed Fiat to sell cars via Tata's Indian dealerships for the past six years.
The move could pave the way for Fiat to strengthen its ties to Suzuki Motor in Asia's third-largest auto market, analysts at IHS Automotive and Cyrrus AS said. Fiat and the Japanese carmaker have worked together for almost a decade, and expanding those ties could help Fiat boost its presence in the country.
Suzuki, which accounts for 42 percent of auto sales in India, may in turn benefit from Fiat's diesel engines and network of dealers in markets such as Brazil, Latin America's biggest economy.
"A marriage with Suzuki would be win-win for both Fiat and Suzuki," said Deepesh Rathore, the New Delhi-based managing director of IHS Automotive in India. "The possibilities are endless."
While the acquisition of Chrysler Group strengthened Fiat's foothold in the United States, the company is still missing out on Asia, which accounted for only around 3 percent of its 2011 sales.
Neither Suzuki, which wants to end its own partnership with Volkswagen, nor Fiat would comment on the potential for an alliance, though Fiat CEO Sergio Marchionne has acknowledged that a partnership in Asia would be beneficial. "I don't have discussions going on with anybody in particular other than general discussions about collaborations," Marchionne said in an April 26 call with analysts. "But we continue to work at this issue."
The Asia Pacific region, excluding Japan, accounted for about 60 percent of the 2.56 million vehicles Suzuki sold in the year ended March 31, company data show. It has dealers across Asia and nine factories in eight countries in the region.
Maruti Suzuki India Ltd., the Suzuki-controlled venture that is India's biggest carmaker, sold 855,730 cars in the country in the year ended March 31.
In 2006, Fiat and Suzuki began selling an SUV that they jointly developed, branded the Sedici by Fiat and the SX4 by Suzuki. In 2004, a Fiat venture with General Motors Co. licensed Suzuki to make diesel engines for cars sold in India and Hungary. In 2009, Suzuki started buying 2-liter diesel engines from Fiat for the SX4. In January, Fiat began supplying Maruti with 100,000 1.3-liter diesel engines a year.