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Not just Nano, every Tata car is making losses says Tata Sons Chairman N Chandrasekaran

The Financial Express logo The Financial Express 11-10-2017 FE Online
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Tata Motors' recent increase in domestic sales and the success of cars like Tata Tiago and Tata Tigor has indeed helped Tata Motors to come back on postive growth trajectory but is still away from being a profit making entity for Tata Sons. The company is losing money on every passenger vehilcle that's being manufactured. In an interview to Economic Times, N Chandrasekaran, Chairman, Tata Sons accepted that every single car in the company is losing money and its not just Tata Nano. A lot was spoken about the Tata Nano during the ugly spat between Ratan Tata and Cyrys Mistry but now the Chairman has agreed to Tata's woes in cars/SUVs space that has seen fall in sales for almost a decade. Economic Times quotes N Chandrasekaran saying "In passenger cars, our cost structures are out of whack. Every single car and model is losing money. It's important to pick up volumes and try to become profitable."

The chairman of Tata Sons wants Tata Motors headed by Guenter Butschek to increase its market share in commercial vehicles and to reduce losses in its passenger vehicle business. Tata Motors earlier had plan to cut bring down its suppliers to about 300-400 from an existing 1,200 total suppliers. Tata Motors is working on brining modular platforms to increase commonality that will help in reduction of cost in new vehicle development. Tata Motors has indigenously developed the advance modular platform (AMP) on which new product will be based. The first product on the AMP platform will make its market debut in 2019. The company was also going to share this platform Skoda but things did not work out as it was planned. Tata Motors is still looking for a partner who can leverage the AMP as per the required economics of scale.

To reduce costs the Indian auto maker has also decided to get rid of each of the six platforms that is currently in use and replace them with two new AMP platforms. The company is also betting big on electric cars and the recent aggressive pricing on the tender floated by state run EESL proves that Tata Motors will not fall behind in the electric race. Tata Motors also owns the luxury car brand Jaguar Land Rover (JLR) that has been tasting success ever since Tata took over. It contributes to about 83.57% to Tata Motors' overall revenue. Reports suggest that JLR contributed to 2,34,000 crore to Tata Motor's total revenue of 2,80,000 crore. Company's commercial vehicle business sheds about Rs 45,000 crore and PVs contribute to around 9000 crore.

Tata Motors is still open for a collaboration to replace Skoda. The two criteria which is a must as per Guenter Butschek, MD & CEO, Tata Motors is technology and scale. Tata Motors intends to share its AMP platform with a company who can build their own products which will bring sizeable scale of volumes.

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