Tata to invest $1 billion into passenger vehicle biz

10/7/2018

PUNE (MUMBAI): Tata Motors will invest $1 bln - its biggest ever investment in the passenger vehicle business - in the next three years as above average growth spurs demand for newer cars. Mumbai-based Tata will spend $1 bln after the board approved its mid-term business plan recently which includes investments, people in the know said.

The plans include a new manufacturing line in Pune, which is going through a complete overhaul and Sanand, Gujarat to house the new modular platforms Omega and Alfa to be built in the next five years. These platforms are likely to churn out as much as a dozen new models.

Tata Motors raced past Mahindra & Mahindra in local monthly sales in June, bringing cheer at a time when the UK-based Jaguar Land Rover luxury vehicle unit, the company’s money-spinner business for a long time, has warned of Brexit worries.

A manufacturing line is already being installed at J Block in Pune plant designed for Omega architecture to manufacture the Q5 range of SUVs – H5X 5 seater SUV to roll out by the end of the year, followed by a seven-seater version within a year after that. There will be Alfa or X4 architecture X451 hit the market in 2019 festive season.

Guenter Butschek, Tata Motors MD said the company doesn’t give independent investment plans for the passenger vehicle or commercial vehicle business. Tata had said in the past that it would invest Rs 4,000 crore every year in both passenger and commercial vehicles business. The new investment plan boosts the passenger side of the business significantly with over Rs 6,000 crore being spent on it in three years.

The investment is a part of Tata’s turnaround 2.0 strategy which focuses on winning sustainably in passenger vehicles, the MD said in response to pune-news.com’s questions. “We continue to fortify our capacity utilisation, sales numbers, and cost structures. We are headed towards a long-term objective of accelerated growth. This will be accomplished through product portfolio expansion, network expansion, enhanced quality operations and superlative customer service,” he added.

The reinforcement comes after two consecutive years of 15-20% growth in car sales, significantly outpacing the industry that expanded 8-9%. This growth has been on the back of bridge products — Tiago, Tigor and Nexon. With several new-generation models set to hit the roads in the coming year, company officials are very confident about the strategy.

The Mumbai-based company had stated that it was eyeing a top-three finish on local vehicle sales in the ongoing financial year. Though it nudged past Mahindra in June, it will be difficult to sustain the edge through the year, as the crosstown rival is coming out with two new offerings this year, which will offer incremental volumes to the maker of the Scorpio SUV.

As part of the new operational structure being put in place, there is focus on daily work management, cost reduction targets and holistic inclusion of employees, which collectively helps to accelerate efforts in maturing newly generated potential across the Generated, Evaluated, Approved, Realised (GEAR) milestones, the company said in a statement.