Tata Motors Limited is India’s largest automobile company, with consolidated revenues of Rs.70,938.85 crores (USD 14 billion) in 2008-09. It is the leader in commercial vehicles in each segment, and among the top three in passenger vehicles with winning products in the compact, midsize car and utility vehicle segments. The company is the world’s fourth largest truck manufacturer, and the world’s second largest bus manufacturer.
The company’s 23,000 employees are guided by the vision to be “best in the manner in which we operate, best in the products we deliver, and best in our value system and ethics.” Established in 1945, Tata Motors’ presence indeed cuts across the length and breadth of India. Over 4 million Tata vehicles ply on Indian roads, since the first rolled out in 1954. The company’s manufacturing base in India is spread across Jamshedpur (Jharkhand), Pune (Maharashtra), Lucknow (Uttar Pradesh), Pantnagar (Uttarakhand) and Dharwad (Karnataka).
Following a strategic alliance with Fiat in 2005, it has set up an industrial joint venture with Fiat Group Automobiles at Ranjangaon (Maharashtra) to produce both Fiat and Tata cars and Fiat powertrains. The company is establishing a new plant at Sanand (Gujarat). The companys dealership, sales, services and spare parts network comprises over 3500 touch points; Tata Motors also distributes and markets Fiat branded cars in India. Tata Motors, the first company from India’s engineering sector to be listed in the New York Stock Exchange (September 2004), has also emerged as an international automobile company.
Through subsidiaries and associate companies, Tata Motors has operations in the UK, South Korea, Thailand and Spain. Among them is Jaguar Land Rover, a business comprising the two iconic British brands that was acquired in 2008. In 2004, it acquired the Daewoo Commercial Vehicles Company, South Korea’s second largest truck maker. The rechristened Tata Daewoo Commercial Vehicles Company has launched several new products in the Korean market, while also exporting these products to several international markets.
Today two-thirds of heavy commercial vehicle exports out of South Korea are from Tata Daewoo. In 2005, Tata Motors acquired a 21% stake in Hispano Carrocera, a reputed Spanish bus and coach manufacturer, with an option to acquire the remaining stake as well.
Hispano’s presence is being expanded in other markets. In 2006, it formed a joint venture with the Brazil-based Marcopolo, a global leader in body-building for buses and coaches to manufacture fully-built buses and coaches for India and select international markets. In 2006, Tata Motors entered into joint venture with Thonburi Automotive Assembly Plant Company of Thailand to manufacture and market the company’s pickup vehicles in Thailand. The new plant of Tata Motors (Thailand) has begun production of the Xenon pickup truck, with the Xenon having been launched in Thailand in 2008. Tata Motors is also expanding its international footprint, established through exports since 1961.
The company’s commercial and passenger vehicles are already being marketed in several countries in Europe, Africa, the Middle East, South East Asia, South Asia and South America. It has franchisee/joint venture assembly operations in Kenya, Bangladesh, Ukraine, Russia and Senegal. The foundation of the company’s growth over the last 50 years is a deep understanding of economic stimuli and customer needs, and the ability to translate them into customer-desired offerings through leading edge R&D. With over 2,000 engineers and scientists, the company’s Engineering Research Centre, established in 1966, has enabled pioneering technologies and products.
The company today has R&D centres in Pune, Jamshedpur, Lucknow, in India, and in South Korea, Spain, and the UK. It was Tata Motors, which developed the first indigenously developed Light Commercial Vehicle, India’s first Sports Utility Vehicle and, in 1998, the Tata Indica, India’s first fully indigenous passenger car. In January 2008, Tata Motors unveiled its People’s Car, the Tata Nano, which India and the world have been looking forward to.
The Tata Nano has been subsequently launched, as planned, in India in March 2009. A development, which signifies a first for the global automobile industry, the Nano brings the comfort and safety of a car within the reach of thousands of families In May 2009, Tata Motors introduced ushered in a new era in the Indian automobile industry, in keeping with its pioneering tradition, by unveiling its new range of world standard trucks.
In their power, speed, carrying capacity, operating economy and trims, they will introduce new benchmarks in India and match the best in the world in performance at a lower life-cycle cost. In June 2009, the exciting new range of premium luxury vehicles from Jaguar and Land Rover were introduced for the Indian market. The years to come will see the introduction of several other innovative vehicles, all rooted in emerging customer needs.
Besides product development, R&D is also focusing on environment-friendly technologies in emissions and alternative fuels. Through its subsidiaries, the company is engaged in engineering and automotive solutions, construction equipment manufacturing, automotive vehicle components manufacturing and supply chain activities, machine tools and factory automation solutions, high-precision tooling and plastic and electronic components for automotive and computer applications, and automotive retailing and service operations. With the foundation of its rich heritage, Tata Motors today is etching a refulgent future.
TATA MOTORS DOMESTIC SALES.
Tata Motors’ total sales (including exports) of Tata commercial and passenger vehicles were 45,399 vehicles, a decline of 4% over 47,245 vehicles sold in June last year. The company’s domestic sales of Tata commercial and passenger vehicles for the month of June 2009 were 43,244 nos., a 1% decline over 43,814 nos. sold in June last year. Cumulative sales (including exports) for the company for the quarter at 123,113 nos., declined by 7%, compared to 131,733 nos. sold last year.
Commercial VehiclesThe company’s sales of commercial vehicles in June 2009 in the domestic market were 26,205 nos., a 2% decline compared to 26,797 vehicles sold in June last year. LCV sales were 16,256 nos., a growth of 17% over June 2008, while M&HCV sales stood at 9,949 nos., a decline of 23% over June 2008 but an increase of 15% over May 2009. Cumulative sales of commercial vehicles in the domestic market for the first quarter of the fiscal were 72,056 nos., a growth of 1% over last year. Cumulative M&HCV sales stood at 26,626 nos., a decline of 26% over last year, while LCV sales for the quarter were 45,430 nos., a growth of 27% over last year.
Passenger VehiclesThe passenger vehicle business reported a total sale and distribution offtake of 19,513 nos. (17,039 Tata + 2,474 Fiat) in the domestic market in June 2009, an 11% increase compared to 17,567 nos. (17,017 Tata + 550 Fiat) in June 2008, and an increase of 17.8% over 16,563 nos. (15,388 Tata + 1,175 Fiat) of May 2009. The Indica range grew for the fifth consecutive month at sales of 10,210 nos. — a growth of 19% over June 2008.
The Indigo family recorded sales of 3,522 nos., a 26% decline over June 2008, but a growth of 24.4% over 2,832 nos. of May 2009. The Sumo/Safari range accounted for sales of 3,307 nos., a decline of 11% compared to June 2008, but a growth of 29.7% over 2,550 nos. of May 2009.The company launched the Jaguar and Land Rover range in the last week of June in Mumbai.
Cumulative sales and distribution offtake of passenger vehicles in the domestic market for the quarter were 50,691 nos. (45,837 Tata + 4,854 Fiat), against 52,495 nos. (51,094 Tata + 1,401 Fiat) in the same period last year. Cumulative sales of the Indica range at 28,849 nos., reported a growth of 12%. Cumulative sales of the Indigo family were 8,923 nos., a 32% decline over the same period last year. Cumulative sales of the Sumo/Safari range were 8,065 nos., a decline of 35%.
ExportsThe company’s sales from exports at 2,155 vehicles in June 2009 declined by 37% compared to 3,431 vehicles in June 2008. The cumulative sales from exports for the fiscal at 5,220 nos. declined by 43% over 9,159 nos. in the same period last year. SWOT ANALYSIS
STRENGTHS•The internationalisation strategy so far has been to keep local managers in new acquisitions, and to only transplant a couple of senior managers from India into the new market. The benefit is that Tata has been able to exchange expertise. For example after the Daewoo acquisition the Indian company leaned work discipline and how to get the final product ‘right first time.’ •The company has a strategy in place for the next stage of its expansion. Not only is it focusing upon new products and acquisitions, but it also has a programme of intensive management development in place in order to establish its leaders for tomorrow.
•The company has had a successful alliance with Italian mass producer Fiat since 2006. This has enhanced the product portfolio for Tata and Fiat in terms of production andknowledge exchange. For example, the Fiat Palio Style was launched by Tata in 2007,. WEAKNESSES
•The company’s passenger car products are based upon 3rd and 4th generation platforms, which put Tata Motors Limited at a disadvantage with competing car manufacturers. •Despite buying the Jaguar and Land Rover brands Tata has not got a foothold in the luxury car segment in its domestic, Indian market. Is the brand associated with commercial vehicles and low-cost passenger cars to the extent that it has isolated itself from lucrative segments in a more aspiring India? •One weakness which is often not recognised is that in English the word ‘tat’ means rubbish. Would the brand sensitive British consumer ever buy into such a brand? Maybe not, but they would buy into Fiat, Jaguar and Land Rover. OPPORTUNITIES
•In the summer of 2008 Tata Motor’s announced that it had successfully purchased the Land Rover and Jaguar brands from Ford Motors for UK £2.3 million. Two of the World’s luxury car brand have been added to its portfolio of brands, and will undoubtedly off the company the chance to market vehicles in the luxury segments. •Tata Motors Limited acquired Daewoo Motor’s Commercial vehicle business in 2004 for around USD $16 million. •Nano is the cheapest car in the World – retailing at little more than a motorbike. Whilst the World is getting ready for greener alternatives to gas-guzzlers, is the Nano the answer in terms of concept or brand? Incidentally, the new Land Rover and Jaguar models will cost up to 85 times more than a standard Nano!
•The new global track platform is about to be launched from its Korean (previously Daewoo) plant. Again, at a time when the World is looking for environmentally friendly transport alternatives, is now the right time to move into this segment? The answer to this question (and the one above) is that new and emerging industrial nations such as India, South Korea and China will have a thirst for low-cost passenger and commercial vehicles.
These are the opportunities. However the company has put in place a very proactive Corporate Social Responsibility (CSR) committee to address potential strategies that will make is operations more sustainable. •The range of Super Milo fuel efficient buses are powered by super-efficient, eco-friendly engines. The bus has optional organic clutch with booster assist and better air intakes that will reduce fuel consumption by up to 10%.
THREATS•Other competing car manufacturers have been in the passenger car business for 40, 50 or more years. Therefore Tata Motors Limited has to catch up in terms of quality and lean production. •Sustainability and environmentalism could mean extra costs for this low-cost producer. This could impact its underpinning competitive advantage. Obviously, as Tata globalises and buys into other brands this problem could be alleviated. •Since the company has focused upon the commercial and small vehicle segments, it has left itself open to competition from overseas companies for the emerging Indian luxury segments.
For example ICICI bank and DaimlerChrysler have invested in a new Pune-based plant which will build 5000 new Mercedes-Benz per annum. Other players developing luxury cars targeted at the Indian market include Ford, Honda and Toyota. In fact the entire Indian market has become a target for other global competitors including Maruti Udyog, General Motors, Ford and others. •Rising prices in the global economy could pose a threat to Tata Motors Limited on a couple of fronts. The price of steel and aluminium is increasing putting pressure on the costs of production. Many of Tata’s products run on Diesel fuel which is becoming expensive globally and within its traditional home market.