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Organizational Structure Of Tata Motors Essays On Success

Brand Evaluation Of Tata Motors Essay

Company Background:


Tata Motors is India's foremost, and only fully integrated, automobile manufacturer. Established in 1945 as the Tata Engineering and Locomotive Company to manufacture locomotives and other engineering products, the company is today among the world's top 10 producers of commercial vehicles.

Tata Motors, previously known as Tata Engineering, is one of the biggest and most prominent companies in the Tata Group, with an annual turnover of US$ 1.8 billion in 2001-02.

Area of Business

Tata Motors' product range covers passenger cars, multi-utility vehicles and light, medium and heavy commercial vehicles for goods and passenger transport. Seven out of 10 medium and heavy commercial vehicles in India bear the trusted Tata mark.

The Indica V2 -- India's first indigenously designed and manufactured passenger car -- has been a phenomenal success, standing testimony to the company's research and engineering expertise. Tata Motors followed this up with the launch in 2002 of the Indigo, a sedan.

The company enjoys a significant demand in export markets such as Europe, Australia, South East Asia, the Middle East and Africa. Tata Motors vehicles currently sell in over 70 countries.

The Passenger Car Industry:

The global car industry is estimated to be valued at around 38mn cars and US$700bn in value. The highly penetrated markets of US, Europe and Japan have witnessed a slowdown in demand growth during the last three years due to economic slowdown. Most auto majors globally have therefore set their sight on the low penetrated markets in developing economies.

Global Penetration statistics

Country Cars per thousand population

USA 800

Japan 700

Bangladesh 14

Sri Lanka 12

India 7

As it's clear from the above pie chart, Tata Indica (shown as Telco) in the figure has a share of 11.5%.

The Indian Passenger Car Industry in the Financial Year 2002-03:

As we know Tata Indica falls in the Segment B and segment B has a total sales of 357292 and has a market share of 53%, higher than any other segment. Telco has a installed capacity of 160000 and utilization of 58%.

Strength and Weaknesses of the Major Players in Segment B

1. Hyundai - Santro.

Hyundai's performance in India has not been entirely blemishless. The company did not bring its latest engine technology to India and unlike rival Daewoo, could offer its Euro II2 compliant versions only at a higher price. In the process, the company's image took a beating. Hyundai also miscalculated the demand for the Santro. When demand peaked, customers had to wait for three months. Hyundai has now embarked on a capacity expansion project at its plant in Sriperambadur in Madras. The investment of around $400 million will take the capacity from 120,000 cars to 200,000 by December...

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In its last fiscal year, which ended in March, Jaguar Land Rover posted a 27 percent jump in retail sales, to 306,000 vehicles, and became the primary driver of growth and profit for Tata Motors. The Indian car and truck business of Tata has stagnated in the same time because of a slowing domestic economy and a weak product lineup that includes about a dozen passenger cars. Sales of Tata cars were up an anemic 4 percent in the previous fiscal year.

Analysts said that barring a global economic recession, they expected Jaguar Land Rover to continue to do well because it was about to release several new models, including a redesigned version of its flagship Range Rover and the F-Type.

“I think people were a bit skeptical and snobbish and maybe had some old colonial hangover,” Tim Urquhart, a senior analyst at IHS Automotive in London, said about the initial doubts about the acquisition. But he added, “If you look at Land Rover and Jaguar now, they probably have the strongest product line in their recent history if not ever.”

Tata’s takeover of Jaguar Land Rover did not always look promising. The financial crisis hit soon after the deal closed, and demand for luxury cars tumbled in Europe and North America — its two biggest markets. Struggling with a $3 billion debt it took on to pay for the deal, Tata Motors was forced to put more money into the company after it failed to secure financial aid from Britain.

Many analysts questioned whether the company paid too much and extended itself too far, speculating that its chairman, Ratan Tata, a car buff and scion of the family that built the Tata group of companies, had become too enamored of buying global brands. Over the years, the group has acquired Tetley Tea, the Pierre Hotel in New York and Daewoo Commercial Vehicles in South Korea.

“The acquisition has worked because the investment has been carefully targeted and effective,” Phil Popham, global operations director for Jaguar Land Rover, said in a written response to questions. “Our growth is supported by a disciplined financial plan involving tight cost controls and targeted investments.”

Analysts and competitors credit the turnaround to Tata’s financial reserves, which helped it weather tough times, and its wisdom in granting autonomy to managers in England.

“What has helped is that Tata had staying power,” said an executive at another auto company who asked not to be named because he did not want to speak publicly about a rival. “And Tata adopted a hands-off policy.”

The Ford effect extends beyond its past investments in the brands and the design and engineering for the Evoque. Most engines in Jaguar Land Rover cars still come from Ford, though the company is building its own engine factory in England.

Led by a former BMW executive, Ralf Speth, who took over as chief executive in early 2010, Jaguar Land Rover makes all of its cars, which range from $36,000 for an entry level S.U.V. to $140,000 for a convertible, in factories in England, though it is now starting assembly operations in other countries. The company reported this month that its latest quarterly profit was up 7.5 percent from a year ago to £235.9 million, or $372 million.

In North America, the company’s sales were up 15 percent, to 58,003 cars, in the fiscal year that ended in March. J. D. Power recently rated Jaguar as the “most improved” car brand in its quality rankings.

Much of the success has come in China, a country that provided just 1 percent of Jaguar Land Rover’s sales as recently as 2005 and is projected to generate sales in the double digits this year. The company made a big effort to expand dealerships in the country, where luxury car sales have been much stronger than in Western markets. Executives expect China to become the company’s largest market soon, and last year they announced that Jaguar Land Rover would begin building and assembling cars there.

High-end car buyers in China appear to be drawn to Jaguars and Land Rovers in part because they are considered a novelty.

Liu Gang, a 33-year-old finance executive in Shanghai who confessed to not knowing much about cars, recently bought a Jaguar XF sports sedan, for which he paid 700,000 yuan, or $110,000. He considered and dismissed comparable models from BMW and Mercedes-Benz as passé. “Let me be honest, it’s just a symbol of status,” he said. “Anybody in China can have a Mercedes-Benz.”

But analysts say the Jaguar Land Rover’s growing reliance on China suggests that a sharp slowdown there and another euro-related shock in Europe could derail its growth. Another concern is whether the company has enough models beside the Evoque to power future sales. The Evoque accounted for 85 percent of sales growth in the last fiscal year even though it was only on sale for the last seven months of the year. By contrast, sales of Jaguars have been relatively muted, increasing just 5 percent in the last fiscal year. More recently, Jaguar posted a 16.3 percent increase in global sales in the first seven months of this year compared with the same period last year.

Mr. Popham said the company expected sales of Jaguars to pick up with the introduction of the F-Type, a long-awaited sequel to its well-known E-Type roadster, which was introduced in 1961 and is considered by many car aficionados as one of the most beautiful sports cars ever made. A production version of the F-Type will make its debut at the Paris Motor Show on Sept. 27.

“A lot is riding on the F-Type roadster,” said Hormazd Sorabjee, editor of AutoCar India, a Mumbai-based car magazine, adding that Jaguar has made big strides but still has a “fair amount to do.”

Still, analysts say that for Tata Motors, which recently hired a senior executive from General Motors to help revive its flagging Indian auto business, Jaguar Land Rover is likely to remain a driving force for the near future.

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