RATAN TATA UNFOLDS A GRAND DESIGN
The Jaguar-Land Rover deal is not about high-end models; it’s to do with the launch of the Rs.1 lakh car, says KARAN MEHRISHI
It was a confident Ratan Tata, Chairman, Tata group,
who addressed the media at Delhi’s Auto Expo. Contrary to his low-profile image, he subtly chided his critics, while launching the next generation of Indica. “Our critics said that we will not succeed with Indica. Sometimes they were right as we had our own set of problems that many would agree. But we succeeded, and I want to thank everybody at Tata Motors (Telco earlier) for this achievement.”
The same afternoon, he had a closed-door lunch with senior editors and journalists to talk about the much-awaited ‘nationalist’ car, the cheapest in the world at $2,500 (Rs.1 lakh). And almost everyone is waiting for some sort of a confirmation on the Jaguar-Land Rover front, or whether Tata Motors, which has emerged as the ‘most preferred bidder’, will buy out these two high-profile brands from America’s Ford Motor Company. (In fact, the news about it may be trickling in even as you read this article)
So, what is Tata’s car strategy behind the acquisitions of high-end models, development and design of, possibly, the cheapest model, and the upgradation of Indica? And how does it tie up with Tata’s reported move to set up a car factory in Thailand, or Tata Motors’ agreements in several European nations to assemble some of its existing models? What any auto buff would like to know is whether all these initiatives are a part of a grand design, or just parts of a puzzle that will never fall into their specific slots?
B&E gives an exclusive peek into what’s going on in Ratan Tata’s mind. We will flesh out the jigsaw puzzle for you, and explain how these seemingly-disconnected strategic pieces will fall into their right places in the near future. We will tell you the real relationship between the Indica, Jaguar and Land Rover, between West Bengal (where Tata wishes to set up a new car factory), Europe and Thailand. So, get ready to drive through a complex circuit that can result in a clear victory for Tata Motors.
Let’s begin this story with diesel, rather than petrol. Indica rode to success on the basis of its diesel engine superiority. It offered Indian consumers a four-wheeler that was much cheaper to run. Not surprisingly, competitors, who earlier ridiculed the idea, were forced to follow suit. But the first-mover advantage helped Indica to maintain its lead. While talking about his company’s diesel orientation, Ravi Kant, MD, Tata Motors, says, “Thermodynamically when you consume diesel, you actually consume less fuel. Diesel has its own advantages, especially in the time of $100 per barrel of crude.”
Now, here’s the first part of the Tata puzzle. Land Rover is supposed to be way ahead in diesel technology. In addition, Land Rover has business relations with diesel engine supplier and designer, with whom Tata Motors may wish to work with to develop the diesel engine for the world’s cheapest car. The coin falls into the slot, the ‘People’s Car’ shifts into second gear. But don’t go too fast, not at the moment.
A few years ago, when Tata Motors took over South Korean Daewoo’s trucks business, many experts thought that it was just another move to capitalise on an opportunity and further its presence in the commercial vehicle segment. But there was more to the takeover than met the eye. It provided the Tatas with a base to scout for low-cost manufacturing bases in South-east Asia. Recently, there have been reports that Tata Motors is toying with the idea of setting up a manufacturing unit in Thailand. And it is not for trucks and buses, but for cheap cars.
In the past, Tata Motors had experimented with another option to slash vehicle manufacturing costs to enable the cheap car concept to take a concrete shape. When the company launched its new range of buses a few years ago, it had outsourced the assembling of the vehicles. Several senior managers told journalists at that time that this was a precursor to what could happen with the Rs.1 lakh car. Newspapers had reported that Ratan Tata plans to outsource assembling to small towns to cut down labour and other administrative costs, apart from being near regional markets.
It was a confident Ratan Tata, Chairman, Tata group,
who addressed the media at Delhi’s Auto Expo. Contrary to his low-profile image, he subtly chided his critics, while launching the next generation of Indica. “Our critics said that we will not succeed with Indica. Sometimes they were right as we had our own set of problems that many would agree. But we succeeded, and I want to thank everybody at Tata Motors (Telco earlier) for this achievement.”The same afternoon, he had a closed-door lunch with senior editors and journalists to talk about the much-awaited ‘nationalist’ car, the cheapest in the world at $2,500 (Rs.1 lakh). And almost everyone is waiting for some sort of a confirmation on the Jaguar-Land Rover front, or whether Tata Motors, which has emerged as the ‘most preferred bidder’, will buy out these two high-profile brands from America’s Ford Motor Company. (In fact, the news about it may be trickling in even as you read this article)
So, what is Tata’s car strategy behind the acquisitions of high-end models, development and design of, possibly, the cheapest model, and the upgradation of Indica? And how does it tie up with Tata’s reported move to set up a car factory in Thailand, or Tata Motors’ agreements in several European nations to assemble some of its existing models? What any auto buff would like to know is whether all these initiatives are a part of a grand design, or just parts of a puzzle that will never fall into their specific slots?
B&E gives an exclusive peek into what’s going on in Ratan Tata’s mind. We will flesh out the jigsaw puzzle for you, and explain how these seemingly-disconnected strategic pieces will fall into their right places in the near future. We will tell you the real relationship between the Indica, Jaguar and Land Rover, between West Bengal (where Tata wishes to set up a new car factory), Europe and Thailand. So, get ready to drive through a complex circuit that can result in a clear victory for Tata Motors.
Let’s begin this story with diesel, rather than petrol. Indica rode to success on the basis of its diesel engine superiority. It offered Indian consumers a four-wheeler that was much cheaper to run. Not surprisingly, competitors, who earlier ridiculed the idea, were forced to follow suit. But the first-mover advantage helped Indica to maintain its lead. While talking about his company’s diesel orientation, Ravi Kant, MD, Tata Motors, says, “Thermodynamically when you consume diesel, you actually consume less fuel. Diesel has its own advantages, especially in the time of $100 per barrel of crude.”
Now, here’s the first part of the Tata puzzle. Land Rover is supposed to be way ahead in diesel technology. In addition, Land Rover has business relations with diesel engine supplier and designer, with whom Tata Motors may wish to work with to develop the diesel engine for the world’s cheapest car. The coin falls into the slot, the ‘People’s Car’ shifts into second gear. But don’t go too fast, not at the moment.
A few years ago, when Tata Motors took over South Korean Daewoo’s trucks business, many experts thought that it was just another move to capitalise on an opportunity and further its presence in the commercial vehicle segment. But there was more to the takeover than met the eye. It provided the Tatas with a base to scout for low-cost manufacturing bases in South-east Asia. Recently, there have been reports that Tata Motors is toying with the idea of setting up a manufacturing unit in Thailand. And it is not for trucks and buses, but for cheap cars.
In the past, Tata Motors had experimented with another option to slash vehicle manufacturing costs to enable the cheap car concept to take a concrete shape. When the company launched its new range of buses a few years ago, it had outsourced the assembling of the vehicles. Several senior managers told journalists at that time that this was a precursor to what could happen with the Rs.1 lakh car. Newspapers had reported that Ratan Tata plans to outsource assembling to small towns to cut down labour and other administrative costs, apart from being near regional markets.
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