After the most forgettable year for Tata Motors in recent memory, the country's largest automaker is making key structural changes in its operations to align its passenger car business with its CV business to create one vision. The company's top management led by managing director Karl Slym has earmarked an investment of over Rs 1,500 to re-vitalise its struggling passenger car business. CNBC-TV18's Ronojoy Banerjee reports.
It is indeed the moment of reckoning for Tata Motors. Not only has it seen its market share slip to just 11.7 percent in passenger vehicles last fiscal, its bread-and-butter segment of trucks & buses too is facing competition with market share declining two percentage points in FY13 to 56 percent.
The message from the company's new management is clear: While it needs to revitalize its passenger car business it cannot ignore its commercial vehicles either. For the first time Tata Motors has decided to increase collaboration between its two businesses in an institutional fashion through the "One Team One Vision" plan.
For this purpose the company has also created four new positions focusing on quality, purchase and supply, product planning and corporate strategy that would be common to both businesses for the first time. Sources also say this collaboration could also see Tata Motors compensate its Nano vendors by giving newer contracts for its voluminous commercial vehicle products like the Ace. Besides aligning backend operations across divisions, the company will focus on hitting the market with spanking new launches.
"Our biggest undoing was not having launched a product in two years etc," Karl Slym, MD, Tata Motors told CNBC-TV18.
While the company will launch six first-of-its-kind heavy trucks and ultra range of LCVs this fiscal, its focus will be on PV business this year. A Tata Motors spokesperson says that out of the total Rs 3,000 crore investment lined up by the company this year a majority will be invested in launching new cars and SUVs apart from refreshments of its existing portfolio.
Sources say the key launches lined up over the next one year includes a bigger, powerful Nano, a small compact hatchback between the Nano and Indica and a compact SUV.
Tata Motors has realised it must make an urgent break from the past in a rapidly changing market --- a message also shared by Cyrus Mistry earlier this month. While the company hopes these new measure will show results in the next two years, industry watchers believe Tata Motors needs to also fix its front end as its brands suffer from legacy issues. Will the company go as far as to drop the Tata name from the car business only time will tell.