India auto industry update (Part 10): Tata in India
As a provider of dealer management systems to automobile dealerships in several emerging markets, we closely follow what happens in the auto industry in key regions around the world. I thought it might be interesting to share some of that information.
In the world's major markets, auto sales are slowing at the same time that competition increases, so global auto manufacturers are setting their sights on big emerging markets like the BRIC countries: China, Russia, Brazil and India.
This series briefly discusses the promising future of the automotive industry in India. We've already looked at what GM, VW, Honda, Ford, Renault-Nissan, Hyundai, Toyota, local king Maruti Suzuki, and now we'll look at local powerhouse...
Tata Motors is India's largest manufacturer, and dates back to 1945. They are among the world's top ten manufacturers, with annual revenue of $1.6 billion dollars.
Tata makes passenger cars, utility vehicles, and light, medium and heavy commercial vehicles for goods and passenger transport. Seven out of 10 medium and heavy commercial vehicles in India are Tatas.
When I was in India last year, I heard only good things about Tata. Not only regarding the public's perception of the good quality of their cars, but much more importantly: Tata is seen as a company that truly and sincerely cares about the people of India. Tata Group invests 30% of its yearly after-tax profit back into the community. And they are a major supporter of India's education system.
Tata's low cost car plan
Tata threw down the gauntlet last year when they announced a small, 4-door, 1 lakh (1 lakh is 100,000 rupees, roughly $2,400 U.S. dollars) "People's Car" to be released in mid-2008. The ultra-low cost is made possible by low manufacturing costs in developing countries, but also by something I just read: "much of it will be made of plastic."
This prompted some manufacturers to speed up their own similar plans, and others to voice either skepticism of the feasibility, or little interesting in following suit. Tata's car is said to have a profit margin of under 3 percent. The car's name has not been made public yet.
However, the 1 lakh ($2,400) target may not be feasible, as Tata Motors Managing Director Ravi Kant recently stated...
“High input costs and fuel costs have made it more challenging to maintain the price at 1 lakh rupees. To know whether we will offer the car at a higher level or not, we need to wait. The actual price of the car will be evident only closer to the launch."
Air powered car
Indian powerhouse Tata Motors is leading the way with the first commercial car to be powered by compressed air, called the City Cat, which is supposed to begin production this year.
The City Cat is based on high performance compressed air technology developed by MDI.
According to Engadget,
The City Cat runs on nothing but compressed air -- which can be refueled at "air stations," and overnight using a built-in compressor -- with a not too shabby top speed of 68 MPH and a range of 125 miles.
The Air Car designers are working on a hybrid version that can compress air while it's operating, potentially making cross-India journeys possible.
It's not completely emissions free travel since the problem of the source of the electricity (usually acquired from fossil fuels) has yet to be solved."
Tata's main threat
Where does Tata see their main threat coming from?
Not Europe. Ratan Tata, CEO of the company, recently said that they are "not afraid of European carmakers, they don't make cheap cars," but that rather that the "greater threat to us is when Chinese companies come to Indian market."
Currently there are no Chinese players in the Indian auto market.
Investment plans
Tata also is said to be ready to invest some $3 billion over the next three years to roll out new cars and commercial vehicles, including new versions of their Indica and Indigo models, and a range of new pick-ups and trucks.
Tata models in India
- Indica
- Indigo
- Indigo Marina minivan
- Fiat Palio Stile, through Fiat Auto India, Tata's joint venture with the Italian automaker
Other reading
- A very good article by "Innovator's Dilemma" author Clayton Christensen: "Tata Motors Vs. Obvio!", a description of Tata's People's Car vs. Brazil's similar initiative called the Obvio.
Posts in this series:
- Part 1: Overview
- Part 2: GM in India
- Part 3: VW in India
- Part 4: Honda in India
- Part 4b: Honda in India, two-wheelers
- Part 5: Ford in India
- Part 6: Renault-Nissan in India
- Part 7: Maruti Suzuki in India
- Part 8: Hyundai in India
- Part 9: Toyota in India
- Part 10: Tata Motors in India
Tags: People's Car, Tata, Tata Motors, Indica, Indigo, Fiat, Fiat India, Fiat Palio, Ratan Tata, India, auto industry, automotive industry, India auto industry, Innovator's Dilemma, Clayton Christensen
Powered by Qumana
Comments