As part of its global foray and to de-risk itself from the vagaries of the domestic auto market, Tata Motors is actively planning to set up assembly plants in South America and Indonesia, its MD Karl Slym told FE on Wednesday.
“We started our business in Indonesia about two months back by importing completely-built units (CBU). We would like to manufacture in Indonesia eventually because of the size of the market. Our phrase is ‘build where you sell’ and that is often the most economic way,” he said, adding that for the Malaysian market the company is already exporting vehicles from its Thailand assembly plant.
Karl Slym also said that South America would be an entirely new continent and a large market potential for Tata Motors, where a local plant would be necessary to avoid high logistics costs. FE had reported in its edition dated September 2, 2013, that Tata Motors officials have met government officials at the external affairs ministry for advice on its South America expansion plans.
“We are not in South America, so that’s an obvious attraction. Building where you sell makes most sense, especially in South America. We don’t have a plant, however, the market is on our radar. The economic downturn in India tells us that if you are dependent only on one country, you get more hurt than others. Currently, only 5% of our sales are outside India, so we have a very strong focus on going global,” Karl Slym said.
Tata Motors is also developing specific variants like adding an automatic transmission option to existing models such as the Vista and Nano hatchbacks, for export markets. “All of these markets have got opportunities for small cars. They all have their own rules, but they have different tastes as well which means that there have to be variants on our current vehicles to keep them satisfied. The Nano has been on trial in Indonesia for many months. We will not go to any market with any car unless its been tried and tested in that market,” Karl Slym said.
A big reason for increased focus on overseas markets is the fact that Tata Motors has had a tough run in India over the past two years, while its UK-based luxury marquee Jaguar Land Rover has enjoyed a strong run. In India, Tata’s passenger vehicles sales are down 37% at 1.55 lakh units in April-December FY14, while commercial vehicles sales have also slipped 25.5% at 2.43 lakh units.
However, a major business restructuring plan undertaken over the past year under a new management is expected to show results from 2014 with new products focussed on higher quality standards expected to be unveiled starting with the Auto Expo next month.