Tata Motors Limited: Ratan’s Next Step

Kim Vladislav

Bolshakova Anastasia

Baev Aleksey

Case 27 TATA Motors Limited: Ratan’s Next Step

Dongguk University

2016

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From the ground level, three powerful forces are roiling the auto industry:

• shifts in consumer demand
• expanded regulatory requirements for safety and fuel economy
• the increased availability of data and information 

Also there are some challenges in the automobile industry:

• Climate change and technological innovation

• the volatility of demand (different markets will have different tastes in cars, so automotive suppliers have to find ways to account for the demand for various brands and, complicating things further, for the differing tastes within one brand)

• the decline in demand and production capacity after the crisis in 2008
• the younger generations of people (in highly urbanized countries) don’t want to own a car anymore and prefer other modes of transport or renting a car. This trend will, probably, impact on automotive industry and because of it auto companies start to deal with it.
• high dependence on prices of two raw material – aluminum and steel  

2

Tata Motor’s history:

This company was founded in 1945 and start with production of locomotives → in 1954 they produced their first commercial vehicle in collaboration with Daimler-Benz AG → in 1991 Tata Motors entered the passenger vehicle market  → than, in 1998, they made the first Indian passenger car → in 2008 Tata Motor launched the Tata Nano, the world's cheapest car → nowadays, they continue to make history and they have many great plans for the future.

During their history Tata Motor Company has made many acquisitions, there are some of them:

• In 2004, Tata Motors acquired Daewoo's South Korea-based truck manufacturing unit, Daewoo Commercial Vehicles Company, later renamed Tata Daewoo.
• In 2005, Tata Motors acquired a 21% controlling stake in the Spanish bus and coach manufacturer Hispano Carrocera. Than in 2009 Tata acquired full ownership of Hispano Carrocera.
• In 2008, Tata Motors acquired the English car maker Jaguar Land Rover, manufacturer of the Jaguar and Land Rover from Ford Motor Company.
• in 2010, Tata Motors acquired an 80% stake in the Italian design and engineering company Trilix for €1.85 million. The acquisition formed part of the company's plan to enhance its styling and design capabilities.

3

The Tata Nano is a city car manufactured by Tata Motors. Made and sold in India, the Nano was initially launched with a price of 1500 dollars, which increased in time. Its current price means the claim "world's cheapest car" remains true today. In comparison with Tata’s closest competitor – Maruti 800 – its design implements many measures to reduce manufacturing costs. Another Nano’s competitor in the Indian market is Bajaj RE60, that has been recently launched in the Indian market. The price of that car is even lower than Nano’s and considered to be the cheapest car in the world. In October 2013 a new model of Nano car – Nano CNG – was launched. It can run on either gasoline or compressed natural gas. In December 2014, JA Motorsport presented a 230 hp 1.3-liter engined version of the Nano called the 'Super Nano'.

Nano is considered to be an unsafe car. Despite Tata's claim that it was expecting 4 stars, the Nano actually got no stars for adult protection and didn't meet even basic UN safety requirements. The Nano also has received a tepid reception from Indian consumers. Reasons given have included that it is still too expensive compared with a motorcycle. Although it is identified as the most affordable car, a secondhand car that was more expensive when new has more social cachet.

4

Premier Automotive Group (PAG) is a structural unit of the Ford Motor Company, established in 1998 and brings together prestigious European car brands:

• Lincoln
• Volvo (on 2 August 2010 it was sold to Geely for $1.8 billion)
• Land Rover and Jaguar (were sold to the Tata Motors in March 2008 for £1.15 billion)
• Aston Martin (it was sold on 12 March 2007 for £479 million)

In 2006 Ford Company made a restructuring plan, which is known as “The Way Forward”. This plan includes resizing the company to match current market realities, dropping some unprofitable and inefficient models, consolidating production lines, and shutting down seven vehicle assembly plants and seven parts factories. A bit later the division was abolished and European brands were sold to different companies.  

5

Core competencies of JLR:

• Providing high designed cars for customers
• Using Pro-nature technologies (strategy of “pillars”)
• low fuel consumption in comparison with other luxury cars
• Jaguar Land Rover’s sustainability governance structure (is part of the reason why sustainability is so embedded strategically in the way they do business)
• impeccable reputation among clients
• free take back program

Core competences of Land Rover:

• making premium class off-roads cars (their cars are for those people, who want a little luxury and ability to go everywhere)
• high design (many people around the world like Land Rover cars for its really good design and ability to choose colors and materials inside car)
• great reputation
• wide range of services
• the variety of models of the brand Land Rover
• using high technologies (such as cameras in many sides of automobile and one of the best technologies in 4WARD4X4)

6

Giants companies like “BMW” and “Ford” had tried to make things work JLR before Tata Motors bought it from “Ford” in 2008. Tata Motors are still unknown name in auto-industry market with their majority of business existed well in domestic market (India). In 2008, it seemed failure acquisition JLR Company, but it turned out, nowadays JLR is high-profit Company, and it is expanding like never before. The valuation of JLR was $2.3 billion in 2009; it went up to $14 billion in 2014.