G
Guest
·March 25, 2002
Tata chairman aims to raise quality for European market
Automotive News Europe
As India's first independent automaker, Tata is trying to break out of the domestic market and find new areas in which to grow. Its first big step: Europe. While Tata's Indica hatchback and sedan are standard supermini-size vehicles, the company is also hoping to develop its Indiva minivan from concept into reality. Tata Chairman Ratan Tata talked to Automotive News Europe's Mark Rechtin.
To cope with the slump in the Indian market, you have restructured operations. How is that progressing?
Reasonably well. The problems arose because of a major downturn in the home market, rather than non-acceptance of our products or our costs being out of line. Commercial vehicle demand has fallen 40 percent, and you can't react to that other than to bleed. In 18 months, we got rid of 4,000 people without a strike, and over four years it's been 11,000 people. We've reduced our fixed cost base by $100 million (E114.2 million). We've improved our margins by 3 percent, and they are now at 9 percent, through value engineering on material costs. We hope to cut costs further this year, but it's still not enough because the volume is not there. We have four plants and in today's market we need one. But we can't close three plants and lay off all the people, politically or legally.
Will MG Rover rebadge your Indica to sell in Europe?
We are talking. There are variables - such as MG Rover's financial position and how much this would mean to MG Rover - and if the pricing is right for us. But the Rover brand could do more with the Indica in Europe than Tata ever could. Plus we could import Rovers with a Tata badge in India. The Indica sells for about $10,000 in India, but 40 percent of that is excise duty. None of the majors are interested in us right now, because they can enter the Indian market on their own because the protectionism has been dropped. So we look for a player with a presence or geography different from us.
What are your plans for Europe in general?
I like to move cautiously. I'd rather go where we are visible, like Spain and Italy - and the UK, if we go with MG Rover - and support it with spares and backup. I think we can sell tens of thousands of cars annually.
Is Tata quality good enough for world markets?
We have a lot to do to equal the quality standards that are expected. Real quality comes from design, and we don't have enough experience or processes in place to design a proper transmission, steering rack or even a dashboard switch. Quality also comes from suppliers, and the Indian vendor base is a cottage industry where quality is not a strong point. The Indica had an expensive learning curve, everything from pulleys to timing belts. We've appointed a Japanese consultant to look at our manufacturing process. He's worked with Toyota, Honda and Hyundai. He asks questions like why we have a shower test for leaks instead of fixing the weather stripping before it's installed.
Are you using more non-Indian suppliers now?
We came abroad to have suppliers like Valeo set up in India. We are also making deals with Johnson Controls for seats, Yazaki for instruments, Toyo for radiators and Corning for plastics. This isn't just for us; this is for the whole Indian auto industry. It needs a [better] component base.
How are the negotiations going on engines from Renault?
That's going to happen because we need a larger engine for our Safari [sport-utility] and pickup. It will be a 2.5-liter, inline-four diesel. It will be about 12 months before it's integrated into our product because we have to make engineering changes to the transmission and rear axle.
Tata chairman aims to raise quality for European market
Automotive News Europe
As India's first independent automaker, Tata is trying to break out of the domestic market and find new areas in which to grow. Its first big step: Europe. While Tata's Indica hatchback and sedan are standard supermini-size vehicles, the company is also hoping to develop its Indiva minivan from concept into reality. Tata Chairman Ratan Tata talked to Automotive News Europe's Mark Rechtin.
To cope with the slump in the Indian market, you have restructured operations. How is that progressing?
Reasonably well. The problems arose because of a major downturn in the home market, rather than non-acceptance of our products or our costs being out of line. Commercial vehicle demand has fallen 40 percent, and you can't react to that other than to bleed. In 18 months, we got rid of 4,000 people without a strike, and over four years it's been 11,000 people. We've reduced our fixed cost base by $100 million (E114.2 million). We've improved our margins by 3 percent, and they are now at 9 percent, through value engineering on material costs. We hope to cut costs further this year, but it's still not enough because the volume is not there. We have four plants and in today's market we need one. But we can't close three plants and lay off all the people, politically or legally.
Will MG Rover rebadge your Indica to sell in Europe?
We are talking. There are variables - such as MG Rover's financial position and how much this would mean to MG Rover - and if the pricing is right for us. But the Rover brand could do more with the Indica in Europe than Tata ever could. Plus we could import Rovers with a Tata badge in India. The Indica sells for about $10,000 in India, but 40 percent of that is excise duty. None of the majors are interested in us right now, because they can enter the Indian market on their own because the protectionism has been dropped. So we look for a player with a presence or geography different from us.
What are your plans for Europe in general?
I like to move cautiously. I'd rather go where we are visible, like Spain and Italy - and the UK, if we go with MG Rover - and support it with spares and backup. I think we can sell tens of thousands of cars annually.
Is Tata quality good enough for world markets?
We have a lot to do to equal the quality standards that are expected. Real quality comes from design, and we don't have enough experience or processes in place to design a proper transmission, steering rack or even a dashboard switch. Quality also comes from suppliers, and the Indian vendor base is a cottage industry where quality is not a strong point. The Indica had an expensive learning curve, everything from pulleys to timing belts. We've appointed a Japanese consultant to look at our manufacturing process. He's worked with Toyota, Honda and Hyundai. He asks questions like why we have a shower test for leaks instead of fixing the weather stripping before it's installed.
Are you using more non-Indian suppliers now?
We came abroad to have suppliers like Valeo set up in India. We are also making deals with Johnson Controls for seats, Yazaki for instruments, Toyo for radiators and Corning for plastics. This isn't just for us; this is for the whole Indian auto industry. It needs a [better] component base.
How are the negotiations going on engines from Renault?
That's going to happen because we need a larger engine for our Safari [sport-utility] and pickup. It will be a 2.5-liter, inline-four diesel. It will be about 12 months before it's integrated into our product because we have to make engineering changes to the transmission and rear axle.
