Tata Motors now less vulnerable to unpleasant shocks, says Butschek
MUMBAI: Guenter Butschek, the 57-year-old managing director of Tata Motors Ltd, has steered the company’s India operations to a profit for the first time in five quarters. But the bigger task that Butschek claims he has achieved is making the company less vulnerable to unpleasant shocks.
“Don’t blame the market for dropping the ball. The best argument for me was that overall market volume dropped but it’s not enough of a reason to trouble your market share,” Butschek said in an interview. “Volatility is a fact of life and it is our responsibility to make ourselves as less vulnerable as possible.”
Tata Motors’ Indian unit reported a net profit of ₹184 crore in the three months ended December 31. That helped the owner of British luxury car firm Jaguar Land Rover Plc post a 11-fold jump in its consolidated profit for the quarter. Butschek said Tata Motors is on a much stronger footing now than a year ago. “The lowering of the breakeven point (for the company) is important; if we had been on the same break-even point a year ago... we would’ve been in a much stronger position to face the volatility in the three events of 2016-17,” Butschek said, referring to demonetisation, the implementation of the goods and services tax (GST) and the courtdirected transition to stricter emission standards for vehicles.
Since February 2016, when Butschek took charge, Tata Motors has expanded its market share in the passenger vehicle category by 160 basis points to 6.2%. In the commercial vehicles category, its market share has increased by 130 basis points to 47.5%. A basis point is one-hundredth of a percentage point.
Recounting the tumultuous events of the past year, Butschek said the market suddenly disappeared at the end of June 2017 because there was an expectation that the GST rate for commercial vehicles could be as low as 18%.
Customers were also aware that the transition to Bharat Stage IV (BS-IV) emission norms would lead to higher costs, so they “wanted to wait and see because they could get the BS-IV solution with a tax benefit of a lower GST rate than the BS-III solution”.