Don’t let the wheels fall off
Slimming down its operations means Tata Africa can focus on trucks and buses
Indian industrial group Tata says its decision to ditch manufacturing passenger vehicles and focus instead on building large commercial vehicles in SA was necessary to ensure the company was viable on the continent.
When Tata started doing business in Africa, it made bold forecasts for the growth of its various business arms, including chemicals, technology, hospitality and power generation. In SA, executives predicted great things for Tata cars and bakkies. As one brashly declared: “Our attitude is to go big or go home.”
They went home. Despite partnering with a local import group, light-vehicle sales made little headway and Tata withdrew from the market in 2017. “We had the wrong products for this market,” admits Tata Africa Holdings CEO Len Brand. “It was a mess.”
Since Brand became CEO in August 2016, Tata Africa has shed almost all its activities except trucks and buses and now manages them from India. “We can be a conduit for them in Africa but it’s for them to take it further,” he says. “We still have a couple of Raj hotels in our portfolio but otherwise we are sticking to what we know and what we do best,” Brand says.
“Best” wasn’t always very good. Truck sales were healthy but aftersales service wasn’t. “Availability of spare parts was poor,” Brand says. “If you broke down, you were in trouble.” Many first-time customers did not come back a second time.
Brand has concentrated on that side of the business in the past three years. Parts availability has improved considerably. “We are now fanatical about keeping you on the road,” he says.
Or on the dirt. Tata trucks are aimed at customers less concerned with technological innovation than with a durable, robust vehicle for African conditions. The Tataowned brand Daewoo is for more upmarket customers.
“Tata trucks are designed in India where the roads are terrible and owners seriously overload their vehicles,” Brand says. “We add steel for a more rugged chassis. That doesn’t always help when you are on tar but when you go off the road, we have an advantage.”
That ruggedness has worked well elsewhere in Sub-saharan Africa. In Zambia, says Brand, 70% of new trucks sold are Tatas. That’s partly down to having the right product but also because Tata provides vehicle finance in countries where it’s otherwise impossible to find. “Someone has to take that initial risk,” he says.
“At one stage, our finance company in Tanzania was underwriting 70% of our truck sales. Now it’s 45%-50% because commercial banks realise they were wrong and are moving into the space.”
In SA, Tata Africa assembles truck kits sent from India. The Rosslyn, Pretoria plant builds about 1,200 vehicles annually. It services SA, Namibia, Botswana, Lesotho and Swaziland. “Our parent company doesn’t want us to build for other countries in the region, even though it would probably make sense for us to do so,” says Brand.