As it works to reposition itself in the car market at home by launching new products, Tata Motors is not ignoring the overseas territory. In a first, the company is setting up a full-fledged car assembly plant overseas — in Venezuela — to penetrate the 4.5-million-unit South American market. Though Tata Motors has nine commercial vehicle (CV) plants overseas, so far it has none for the passenger cars.
The Venezuelan plant, to be operated jointly with a partner, would initially assemble the Manza sedan and Indica eV2 models from completely knocked down (CKD) kits exported from India, and later be expanded to manufacture other products, sources in the know told FE. While an announcement is likely by September, the assembly plant is expected to have an initial capacity of 20,000 units a year.
Confirming the development, a Tata Motors spokes-person said, “Yes, Tata Motors is setting up a plant in Venezuela to carry out full-scale assembly of passenger vehicles. We will make appropriate announcements when we are ready.”
Tata Motors’ latest move follows several other Indian automakers that have woken up to the vast opportunity in South America, which has annual sales of about 4.5 million cars. While the Venezuelan market fell 28% to 43,887 units in 2013, Brazil remains the biggest at 2.76 million units, followed by Argentina, Chile and Colombia. Local manufacturing is deemed necessary for any serious effort both because of the logistical challenges — huge distance from India — and because most countries in the continent, like Brazil, have rules to discourage exports and promote local production.
Mahindra, which already operates a car assembly plant in Manaus (Brazil) with a local partner, is believed to be considering a new, bigger plant with more local content addition at a location closer to Sao Paulo or Rio de Janeiro.
Meanwhile, Hero MotoCorp recently started work on a two-wheeler plant in Colombia, from where it will export across the continent — Hero will enter Brazil in 2016, later setting up a plant there as well. In fact, Maruti Suzuki is also focused on expanding exports to South America.
"Gaurav Vangaal, analyst for light vehicle forecasting at IHS Automotive, said: “There are many India-made vehicles available in Latin American countries today and are also gaining popularity, but to add production at the site is a significant move. It will allow Tata Motors to expand its global presence to