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Discussion Starter · #1 ·
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.

Discussion Starter · #2 ·
Latest news on TATA


MUMBAI: Telco is understood to be at an advanced stage of negotiation with British carmaker MG Rover to export its small car Indica to the UK, sources familiar with the matter said. Preliminary talks with a Chinese company are also on to export the vehicle to China. “It’s not easy to set up local manufacturing in China given the tough laws,” sources said.

However, the export deal with the Iranian company, Khodro, has run into problems on account of foreign exchange regulations in that country. Sources said that MG Rover is almost close to taking over the ailing Warsaw car plant of Daewoo, the bankrupt Korean manufacturer. If the deal fructifies, Rover may assemble Indicas at this Polish plant as a springboard to the booming east European market.

While a Rovers spokesperson refused to say how much the British car group would invest in the plant or whether it would just operate it on a licence, the Polish government is pressing Rover to buy at least its 10% stake. Under the proposed deal, expected to be completed within months, Rover would produce its own range of models and Daewoo’s Matiz, Nubira and Lanos vehicles.

The plant also builds the Fiat Polonez. The Polish government is looking for a new strategic investor to take over the Daewoo plant in Warsaw, which was not acquired by General Motors when it bought parts of Daewoo’s automotive business in March. Daewoo, recently taken over by General Motors and a consortium of Korean creditor banks, has invested $1.4 bn in modernising the Zeran plant but the local subsidiary owes $300m to Polish and Korean banks, $700m to its original parent and $60m in unpaid taxes to the Polish treasury.

With Indica volumes soaring in the domestic market in recent months, the company is now exploring major export opportunities to extend its successfull run to the international markets as well.

Besides, efforts are also on to export the Indica to other European destinations including Switzerland, France and Germany. Telco plans to appoint dealers and distributors for selling the Indica in these markets

I'm not as think as you confused am I
1,023 Posts
This could be very good for MGR. Coming from a rural area, we have seen Tata 4x4 and 4x2 in use quite a lot from the very early days and the majority of users are extremely impressed with the product. If they can resolve the quality issues, it can only be good to reintroduce a sub-25 size car (why the h3ll *** dropped the Metro without replacement is beyond me, it was only really the biased press that were causing problems as they were still selling well right up to the end).

Chinese Crackers
3,585 Posts
I like this deal better than the CB deal, afterall they have shown their true colours talking to the Bavarian bunch:D
Seriously, there are some strong Indian links with MG's heritage. Standard was a name applied to Rovers (SD1) and the Montego, but few could afford them at the time though quite a few are still on the road. Heralds abound, and of course, the Hindustan Ambassador is Morris Oxford/Isis based (now with Isuzu motive power!)
Think what an association with an Indian manufacturer could do for sales with the Indian market in the UK! Although politically, that may offend the Pakastani populace? However, there are surely more patriotic Indians than Chinese that MG R links with Tata could benefit. From my many business trips all over India, if their car survives their roads and servicing standards, I doubt AA membership would ever be needed again!

Some of the UK Tata 4x4 imodels areactually old Mercedes models so they should be reliable.
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