India’s emergence as a significant player as both a customer and manufacturer in the world’s autos industry has been confirmed this week at Delhi’s 10th Auto Expo, where over 2,000 companies from 30 countries are displaying their wares. They include moist of the world’s car manufacturers, several of which have launched new models in the past couple of days with all the hoopla of such events.
Ratan Tata this week
The Expo also marks the emergence – albeit somewhat precariously – of Tata Motors as India’s broadest-based and most interesting auto manufacturer, with products that range from buses and trucks through smaller commercial vehicles and conventional saloon cars to stylish models from Jaguar and Land Rover (JLR), and the tiny Nano that was first displayed at the last motor show two years ago.
India’s market leader for cars is Maruti Suzuki, which was founded 26 years ago as a joint venture between Maruti, then Indian government owned, and Suzuki of Japan. That link-up made Maruti Suzuki the catalyst for the development of the Indian auto industry that is on show this week.
But, when I toured the show two days ago, it was clear that it is Tata Motors that is gearing up to mark out the future.
Maruti has a large stand near the entrance and all its cars were on display, backed up when I was there with a lonely-looking but entertaining jazz band on a stage overlooking jazzed up versions of its models. Walking through the exhibition grounds, international motor manufacturers such as Chrysler, BMW, Toyota, and Volkswagen were launching new models and concept cars.
A Nano-style taxi
But it was Tata that dominated with an amazing array of products that included a new Jaguar’s JX , launched elsewhere last year. There was also a Nano-like mini-taxi called Magic Iris, due to launch within the next year, with a passenger door on only one side and flap-down passenger windows.
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This is impressive for a long-established truck company (now the world’s fourth largest) that was mocked by other Indian auto manufacturers when it first started making cars in the 1990s, was criticised for the poor quality and unreliability of its small Indica saloon in 1998, was harried by setbacks on the Nano, was reported to have mishandled its relations last year with the UK government over aid for JLR, has been pilloried in recent weeks for its low-slung buses that keep catching fire on Delhi roads, and has only a 13.6% share of India’s car market compared with Maruti’s 50% and Hyundai’s 16%.
Ratan Tata, head of the Tata group, and chairman of Tata Motors, acknowledged the reputation for poor quality when he was asked at a press conference on Tuesday about a products needing “heavy maintenance”. He suggested the reputation came partly from “vested interests” (competitors) and “people who use (the cars) less”, explaining that taxi drivers plying the Indica and Indigo models do 100kms or more a year and seem content.
He also said that Japanese manufacturers were similarly criticised when they started making cars – rather an unfortunate comparison, given the appalling reputation that Japanese cars had a few decades ago.
“We are a fairly new company trying to establish ourselves in as many (segments) as possible,” said Tata, who is more personally involved with Tata Motors than any other group company. He could have added that, despite geerating $14bn revenues (2008-09), the company has a heavily bureaucratic and hierarchical management that still does not always recognise the need for quality, despite the efforts of Ravi Kant, the vice chairman who has run the business for Ratan Tata for several years, and other top executives.
Ratan Tata now has three main challenges – to build a popular car brand with the cachet of Hyundai and the customer loyalty of Maruti, to turn round JLR, and to make a success of the delayed Nano.
Arguably, he should never have bought loss-making JLR from Ford in 2008 because the once-iconic brands had defied would-be rescuers for years. Apparently, he did not have many supporters within his company for such a risky buy but, seeing them at the show this week, it began to make sense.
There seemed to be a constructive synergy between him and JLR management, with both talking about what Tata called the once iconic models “making their own destinies…..rekindling their roots”. Tata also seemed willing to ride out losses because “in this part of the world you buy (a company) to live with it and develop it into something”. JLR had been bought not just as a short-term ploy, nor just “to add to turnover or egos”, but also for its potential and what could be gained in terms of “enormous skill and capabilities”.
I wasn’t a Nano fan when it was launched in March last year, and I still am not. I’ve only see one on the cluttered roads of the Delhi and it looked not only tiny but also desperately vulnerable – which it is measured when against US safety standards. Only about 20,000 have been delivered to dealers, and production has yet to start at the main factory in Gujarat that has been built since local opposition led Tata to abandon its plant in West Bengal.
Ratan Tata, who is 72 and due to retire in a couple of years, also has to name a successor. The current favourite is Noel Tata, a shy and little-seen cousin who runs Tata’s retail stores. The choice is important of course for the entire group, but it is vital for Tata Motors where Ratan Tata personally binds the business together and has been the inspiration for its growth – especially buying JLR and developing the Nano that have yet to prove themselves. And on that depends the future role of Tata Motors as the leader of India’s auto industry.
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