Tata Motors looks overseas for growth
Firm facing bumpy roads back home
MUMBAI: Tata Motors, the country’s largest manufacturer of commercial vehicles, plans to extend its hold beyond Indian shores, and also emerge from the shadows of Jaguar Land Rover, new managing director, Guenter Butschek, has said.
The marketshare of Tata Motors has seen steady erosion over the past few years, coming down from 59.8% in 2011-12 to 46.4% in 2015-16 as competitors, both domestic and multinational, made steady inroads. Butschek, brought in from Airbus earlier this year, is pushing the company to markets extending from southeastern Asia all the way to Latin America.
“Global expansion will be an important theme going forward as it offers economies of scale and returns on our R&D investment and longer product cycles across markets,” Butschek told shareholders recently.
An export push will not only give Tata Motors’ trucks and passenger vehicle business, scale, but also safeguard it from demand cycles, he added.
For Tata Motors, the renewed export push comes at a time when it is plunging down the ranks in passenger vehicle sales. Its marketshare in India has fallen sharply from 13% to 4.6% from 2011-12 to 2015-16. Exports, on the other hand, are moving up handily: Tata Motors exported 58,058 vehicles in 2015-16, up 16% compared with the 49,936 units in 2014-15. But even this is dominated by commercial vehicles — 54,052 of last fiscal’s exports were CVs. Export revenue last year was ₹4,372 crore, up from ₹3,980 crore in 2014-15.
The company has a presence in markets like Sri Lanka, Bangladesh, Thailand, Indonesia, West Asia and South Africa, and has opened new assembly lines with third parties in Vietnam and Tunisia. At the same time, it is expanding in some existing markets with new launches.
“To become a global player, you have to look at each growing market. Many of the emerging markets are similar and products developed in India could be easily adaptable there,” said Abdul Majeed, leader, automotive practice, PwC India.
However, only launching products may not be enough. “Unless, it can build a sizeable marketshare in these markets, Tata Motors will find it hard to establish the brand and get desired volumes. Therefore product launches apart, focusing on a strong distribution and after sales network, brand building will be a key,” he added.
British luxury brand Jaguar Land Rover accounts for over 90% of Tata Motors’ revenue.
With Chinese automakers also pushing overseas, it is imperative that Indian companies like Tata Motors get aggressive, particularly in emerging markets, which have similar demographics and automobile demands, if they have to be a global brand, say experts.