Tata Motors Developing New Trucks, Buses to Keep India Leadership Amid Competition
07/13/2012| 05:00am US/Eastern
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By Nikhil Gulati
NEW DELHI--Tata Motors Ltd. (TTM), India's largest auto maker by revenue, is developing a new range of fuel-efficient trucks and buses to keep its leadership of the commercial vehicle market in India where it expects the entry of several auto makers to challenge its domination in the coming years, its chairman said.
"In the coming years, Tata Motors' predominance in commercial vehicles will be challenged by the entry of international brands like Mercedes-Benz, Volvo and Navistar which have all entered, or are in the process of entering India," Ratan Tata said in the company's annual report for the financial year ended March 31, which was issued Friday.
India is building cross-country highways, ports, airports and railway lines to bolster growth in an economy that expanded 5.3% during January-March 2012, the slowest growth in nine years. The Indian government expects investments of up to $1 trillion until 2017 to fix the country's creaky infrastructure.
Infrastructure development is considered a key barometer that directly impacts demand for new trucks and buses in the country. Several global and local auto makers have announced ambitious plans for India, betting on the country's plans to modernize its infrastructure.
Daimler AG, Volvo AB, Navistar International Corp., Man AG, Hino Motor Ltd. are trying to tap into this expected surge in demand for commercial vehicles and have either invested in new factories and have developed India-specific products or are in the process of doing so.
Mr. Tata said even though Tata Motors was able to retain its leadership position in the truck and bus market, sales of cars and sport-utility vehicles were below its expectations.
"In passenger cars, Tata Motors will face even greater competition from the many automotive brands that are in the country," he said. "The company will need to address the marketplace more effectively with its existing and future products in order to regain the level of market share that it earlier enjoyed."
Its share of the car and SUV market hasn't changed much from last year at about 14.16%, but sales haven't grown at a steady pace. Its market share has dropped from about 15% three years ago.
A lack of new car and SUV models has dented Tata Motors' sales in the Indian market where a weak economy and rising ownership costs such as expensive loans and fuel have already curtailed spending by consumers. Sales of Tata Motors cars in the local market grew less than 1% in the past financial year to 257,966 autos. That compares with a 2% rise in total local sales of cars.
Mr. Tata also said that U.K.-based unit Jaguar Land Rover Plc. will introduce several new sport sedans and sports cars in the next two years and a new line of competitively priced range of SUVs.
"Jaguar Land Rover has undertaken its most ambitious product development program in its history," Mr. Tata said, without elaborating.
Tata Motors bought Jaguar Land Rover from Ford for $2.3 billion in 2008, just before the global downturn hit global auto makers hard, forcing Tata Motors to cut production, shut down plants and reel under losses. Fortunes gradually turned for the luxury brands, which eventually became the parent company's highest revenue generator globally.
Write to Nikhil Gulati at nikhil.gulati@dowjones.com
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