2. Auto Industry at a glance- India
• The Automotive Mission Plan 2016 launched by the Indian Government seeks to grow
the industry to a size of US$145bn by 2016,presently $45B.
• The Indian automobile industry has emerged as the 6th largest in the world.
• Asia’s 3rd largest exporter of cars.
• 46 leading vehicle and vehicular engine manufacturers in India.
• Accounts for 7% of the GDP and employs 13million directly and indirectly.
• Indian contribution in global industry significant with growing domestic manufacturers.
• Passenger car sales slumped 9.5% in 2013,Trend continues in 2014.
• Commercial vehicle sales fell 2.02% in 2013,remains flat in 2014.
• During interim budget,excise tax was cut from 12% to 8% to give a boost to the industry
which industry analysts say would take time to show results.
3. Major challenges –automobile industry
• Downturn - A combination of factors ,the general economic slowdown, high interest
rates and increasing fuel prices.
• Price sensitive consumer & stress on fuel efficiency.
• Retaining customers a challenge with continuous model launches
• High production cost due to escalating component prices especially engine and chassis
components.
• Low sales and automobile majors’ finished goods inventory incurring huge losses.
• In the commercial vehicle segment- fuel price hike & unchanged freight charges have
eaten into the revenue of freight operators,delaying the purchase of new vehicles.
• Customer-driven demands for cost-effective vehicles and enhanced in-vehicle
experience will lead to technological innovations.
• Exports lower due to political unrest in neighbouring countries like Sri
Lanka,Bangladesh,Pakistan etc.
4.
5. TATA MOTORS
Research and
product
development
Automobile
sales and
service
Finance and
insurance
Components and
Equipments
Passenger
cars
Automobile
Commercial
vehicles
Factory
automation
Equipments
Aerospace
components.
Automobile
Components
Software and
Consultancy
Engineering and
Designing
Aviation
research
Defence and
Artillery
Development
Concorde
Retail
Defense
Equipments
Precision
Equipments
and Comp.
peripherels
Vehicle
finance
Insurance
broking and
advisory
6.
7. Tata Motors- some facts
• Tata motors is India’s largest automobile company.Has 64subsidiaries (10 domestic,54
abroad)
• No. 1 commercial vehicle manufacturer in India.(Market share)
5th in passenger cars in India(Market share)
4th largest manufacturer of buses globally
5th largest manufacturer of trucks globally.
• Company’s dealership, sales, services and spare parts network comprises over 549
dealerships in 357 cities and 6,600 touch points.
• Global- Spread across 182 countries in 6 continents.
• Outperforms in terms of Indian CV exports with a 57% share.
• Jaguar Land Rover, Tata Daewoo, Tata Hispano Motors some of its complete automotive
production subsidiaries.
• Tata Driveline,Tata Technology,TML Forge division,European Technical Centre are its
components subsidiaries.
• Formed JV with Marcopola Brazil for buses,Hitachi for excavators and construction
equipments and Fiat for diesel engines.
8. Tata Motors- Pioneer and Path-breaker.
• Tata Motors contribution to the automobile industry:
• 1954- 1st CV manufacturer of India,collaboration w. Daimler Benz AG.
• 1958- Enters the defense sector as a supplier.
• 1980’s-1st in India to launch CV’s of various segment (407DI,407,6x6,4x4 etc)
• 1991-India’s 1st MUV “Sierra”,shows its indegineous car development prowess.
• 1998-1st SUV “Safari”,” Indica”- India’s first fully indegineously developed passenger car.
• 2005- sub-1-ton indigenously developed truck,”ACE”.
• 2009- Launches World’s 1st micro segment car “Nano”.
• 2012-Fleetman- World’s 1st fleet management service for CV fleet operators..
• 2013- Develops 1st car to run on compressed air”minicat”(yet to enter production).
• 2014- Unveils India’s first affordable automatic diesel engine.
9. The core competencies :
• Being based in India is a major benefactor –
Helps understanding emerging economies,
Develop products for them and expand to other markets.
>One of the first companies in India amongst automobiles with focus on indeginisation.
>Excellent backward integration.
>Develop new products based on their existing strengths .
>Dynamic expansion in automotive development.
>Continuous and sustained R&D,developing products according to market needs.
>Tata motors has used slowdown to restructure its business(2008,present)
>Acquisition,merger and collaboration,has helped spread globally.
>Slowly shifting weights towards exports in line with domestic sales due to global
outreach.
10. Tata Motors – What works for them.
• Strategically located manufacturing units in India, "supply on order”.
• Minimum outsourcing.
• Most Energy efficient and safest automobile plants in India(Awarded by CII,BV).
• Direct Access to auto components - higher bargaining power with manufacturers being a raw
material provider(iron ,steel and its by-products).
• Best SCM and Technology integration through TTL for increasing stock and inventory
optimization.
• Tata Motors - 85% of the components needs met by Tata Steel,Tata Auto comps etc .
• Power needs met through Tata Power in manufacturing plants (barring Lucknow).
• Demand driven production,cuts on plant costs, ”produce on demand”.
• Being suppliers, in case of low demand in-house,they could continue with their production.
• Backward integration helps keep very low inventories.
• Tata CV’s most trusted brand(Forbes) and easy maintenence and value-for-price vehicles.
• Most fuel efficient CV’s and PV’s in their respective segment.
• Excellent spare parts and service network with 6600 touch points in India.
11. Tata Steel(India) and Tata-Corus(UK) Advantage
• Tata Steel supplies most of the component metal requirements to both Tata
motors as well as its suppliers.(see table)
• After acquiring JLR in 2008,JLR was more dependent on aluminium,thus Tata
Group fulfilled its requirement through Tata-Corus(UK),being the biggest
Aluminium producer in Europe..
Material composition Percentage(%)
Steel 55
Iron 9
Aluminium 9
Plastic 12
Others 15
12.
13. Passenger Cars-Tata Motors.
• Presently has 12 models starting from Tata Nano ,to SUV Tata Safari.
• Popular cars include Indica, Indigo platform,Sumo,Venture,Xenon and Aria.
• Over 6600 spare part and service touch points in India in 357 cities.
• Tata PV’s are being exported to over 27countries worldwide including Europe,Africa.
• Acquiring JLR has plugged holes in Tata’s passenger vehicles business.
• JLR product line - high end luxury cars with its service spread across 178 countries with a 2486
franchise dealers.
• Tata has effectively entered the environment friendly car segment- foray into electric and NCER
powered cars.
• Reducing the number of moving parts in a vehicle reduces the overall maintainence cost of the
vehicle.
• Tata Aria,hit in Europe,didn’t work for Indian markets.
• Launched three new models at Auto Expo 2014 ,alongwith excise duty cut has revived customer
enquiry and showroom footfall.
14. Commercial Vehicles
• 1st CV manufacturer of India,collaboration with Daimler Benz AG in 1954.
• Ended its collaboration in 1969.
• Tata has developed a CV for every possible purpose,with over 35models and 100+ variants.
• Commands a 59.5% market share in CV’s in India,volume sales flat owing to downturn.
• Exports to over 45countries worldwide and has manufacturing units through collaboration.
• Brazil,Sri Lanka,South Africa,Bangladesh,Singapore,Korea and Europe being major markets.
• CV load capacity starting from 0.6ton to 49ton CV’s, buses,payload tippers and goods carrier
truck.
• GOI’s infrastructure development plan for new and existing roadways and highways and rural
connectivity to push for demand for CV.
• FY 2013-14, robust growth in agriculture, the demand from the rural segment is likely to sustain.
• 2013-Triple Benefit Assurance for CV, is an industry first that offers customers zero depreciation
insurance, coverage of loss of income and entitlement to reimbursement of full price the vehicle
at the current price, in case of total loss.
15. Production Capacity As on February 2014- Global Presence
*China plant to commence
production in 2016.
New plant to be set up in Brazil and
Saudi Arabia.
Plant expansion in South Africa and
existing Korean plant.
India plant assembles CKD units.
As on 28th Feb 2014
1528000
503000*
60000
Plants in India-Jamshedpur, Pantnagar, Lucknow, Sanand, Dharwad and Pune*.
Plants globally-Argentina,Brazil^,China^,Saudi Arabia^, South Africa, Thailand and the United
Kingdom.
R&D centres at Pune, Jamshedpur, Lucknow and Dharwad, India, and in South Korea, Spain, and the
United Kingdom.
16. Concorde Motors (Retail)
• The direct car retail arm of Tata Motors.7 outlets in major metros .
• Aims at directly connecting TML with the customer.
• 'One Stop Shop' for the complete range of Tata passenger Vehicles, Sales,
Service and Spare parts.
• Complete Tata merchandize and an option to customize your car.
• TML Assured is a used car reseller arm. Has expanded itself with unique
benefits on buying a used car.
• To add up Concorde network by 30 showrooms in Tier two cities by 2016.
• Ties up with Bharatiya Mahila Bank for financing for women customers.
• Tata Finance with a net revenue of a total income of Rs. 2,889.81 crores, is
the financing arm of TML.
17. Tata Motors: Auto component
Tata motors 10% of the revenue comes from Auto component supply and exports.
Exports to Europe and America and domestically as well.
India’s auto components business at $10B in 2013,to grow by 21%CAGR 2012-2017.
Automobile Corporation of Goa Limited is a Tata Motor promoted company,based in Goa. Supplies Assemblies ,shee metal presses and coaches for Tata
Buses Pune and Lucknow.
18. Tata Motors – Acquiring to expand and diversify
• 2004 :Tata Motors acquired 100% stake in Daewoo's South Korea-based truck
manufacturing unit.
• 2005
>Merges with Tata Finance
>buys 21% stake in Hispano-Corcera,largest bus and cabin manufacturer of Europe.
>Buy Wündsch Weidinger of Germany,functional-plastic auto component maker.
• 2006: Tata formed a joint venture with the Brazil-based Marcopolo for fully built buses.
• 2008:
>Acquires 50.3 per cent stake in Norway’s Miljo Grenland/Innovasjon,renames in Tata
Motors European Research Centre.
>Acquires Jaguar Land Rover From Ford for $2.3B.
• 2009: Tata buys remaining stake in Hispano Carrocera.
• In 2010, Tata Motors acquired an 80% stake in the Italian design and engineering
company Trilix for €1.85 million.
• In 2013, 65% of its income were from from JLR.
19.
20. JLR
• Production at UK and China(collab. With Chery Motors China).
• Jaguar-3models and Land Rover 7 models marks TML’s global presence in
premium car segment.
• To set up plant in Brazil and Saudi Arabia.
• Sold 425,006 vehicles in Dec 2014 – up 19% on 2013.
• UK, Jaguar sales were up 15% while Land Rover sales rose 13%.
• Chinese mainland, its largest market, sales increased by almost a third to
95,000.
• USA, India and Germany the other fastest growing market for JLR.
• To add another R&D with addition of 4000jobs in the next 4years.
• Earned £1.68B profit from a revenue of £15.8B.
• Constituted 65% TML’s profits in 2013.
21. Tata Motors: Catering to needs of the nation.
• 100,000 vehicles to the military and paramilitary forces over the last 60 years.
• SAARC and ASEAN regions and Africa also importers of Tata Vehicles for both
defence and public transport needs.
• Into tactical,logistical and armoured vehicle production.
• 2012, Tata Motors announced it would invest around $6 billion in the
development of Futuristic Infantry Combat Vehicles in collaboration with DRDO
• Bagged Rs. 1000k crore contract for supplying vehicles to Indian army.
• 500 vehicles to a United Nations peace-keeping force in Western Africa worth Rs.
220crores.
• Prestigious order for supply of 715 Xenon's from the US Army.
• Supplies low floor buses to GOI for JNNURM and supplies to Kuwait and African
country govts.
• Has tied up with Hindustan Aeronautic Limited for R&D in avaiation.
22. The tough times: Automobile downturn.
• Tata motors excessive plant capacity accruing huge costs.
• Korean arm of the business yet to turn profitable due to low high employee cost.
• Tata Hispano needs immediate restructuring with few operations being redundant.
• Lack of quality products especially w.r.t. competition in PV.
• Poor after sales service and poor sales feedback adds to its woes.
• Costs incurred on excess permanent and temporary employees.
• Competition from leading foreign carmakers like Toyota,Honda,MSIL,Nissan,Mahindra etc with
new models being launched almost every quarter.
• Hasn’t yet entered the farm-trac business which constitutes 12% of combined domestic sales and
exports of automobile in India.
• Tata PV’s lately not considered very reliable,owing to defects and breakdowns.
• Duplicate spare –almost 50%,due to easy production techniques denting its revenue.
• Ergonomics and interiors (PV & CV),not upto the mark compared with competition.
• CV business faces major threat from international brands like Benz and Volvo.
• Tata Motors turn-around MD Karl Slym passes away, responsible for its Horizonnext initiative.
26. TML -Restructuring
• Disinvestment in its Singapore subsidiary Tata Holdings Pte added Rs. 1948cr for TML.
• Component remanufacturing technology to cut on wastes and thereby improving efficiency.
• Shuts down Tata Hispano Carrocera’s Spanish plant.To retain only the utility business.
• JLR's performance improvement in the market may re-rate TML.
• Investing to expand exports especially Middle East,South-East Asia,Europe and South America to beat downturn.
• Has invested to enter pick-up truck markets like Philippines and Thailand with an investment of $100M.
• To cut on employee costs, is downsizing its permanent employee head count in accordance with production levels .
• To invest Rs 1500Crore on CV Development in TMERC,Europe.
• Setting up JLR plants in Brazil,China and Saudi Arabia by 2016,to increase JLR production cap. by 33%.
• Completes its engine line up with a 1.2ltr Revotron engine(developed in house) ,with Govt subsidy cut on diesel
narrowing the gap between petrol and diesel prices.
• Additional investment of CNG,Natural gas,Electric and compressed gas powered vehicles with TMERC.
• Investment to develop Automobile design/interiors through Tata Elxsi and ropes in F1 driver for improving the
overall drivability and ergonomics of TML India line-up.
• JLR started assembling CKD units of 4of its model in India giving,thus bringing down prices and the sales have risen
by 32% in India alone.
• Increasing global manufacturing footprint is a key element of growth strategy.
• Technology inclusion for reducing faulty and defective vehicles.
27. Reference
• Tatamotors.com(Financial statements and company brochure)
• Society of Indian automobile manufacturers.
• Wipro-Dun Bradstreet Industry InitiatIve report
• Crisil research.
• Concorde Motors,Prabhadevi,Mumbai.
• Auto Component Manufacturers association.
Thank you.
