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

"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." says Tata Sons Chairman

By: | Updated: October 11, 2017 11:59 AM

 

Tata Motors Nexon, Maruti Suzuki, Vitara Brezza, Ford Ecosport

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.

Also read: Electric cars for babus: Is it really Mahindra vs Tata Motors in Indian electric car space? Not really

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.

  1. G
    Girish
    Oct 11, 2017 at 1:55 pm
    MD Tata Motors President passenger car appointed by then Group Chairman Respected Cyrus have failed to maintain the business , sustainability in market share, customer concentric, manufacturing costs under check the day they joined great TATA MOTORS giant Automobile in Asia , Their Experience ,Talents they could pass to TML in their positions the pace which was expected from them was totally not satisfied towards achieving Excellence benefits to the Organisation like TATA Motors , root level with high standard thinking , Innovations with compe ive Environmental culture which they failed to bring in towards their operational team with their inbuilt Talents , changing Organisations positions one cannot become big leader or mentor to any Organisation, leader who should change the things from Impossible one to possible one with proper Applications, dedications, commitments with vision , is no point in dreaming big theoretically than practical view every one will do no will do
    Reply
    1. G
      Girish
      Oct 11, 2017 at 1:34 pm
      This already stated in Linked in Zero base costing with product's value Engineering is much needed as over the past few years under the direct materials cost reduction drive , products Quality got down graded with unprecedented Implementations which lead to loss of Quality on vehicles the same resulted performance of product further lost market shares , Tata -Nanno is live Example before launch heavy cost reductions were Implied for which b lost sustainability in Quality performance ,due to lack in marketing strategy Nanoo product was not properly projected in potential customer . Due to poor vendor base Quality particularly . TATA Motors top level needs to be held Accountable to this for not adhering to Direct Materials,Manufacturing cost with respect to it's selling price per car or Vehicle, with suitable profitability, periodic check, proper re-costing, with win situations by President car MrMayank with his team, such models needs to be phase out on profitability
      Reply
      1. K
        KC
        Oct 11, 2017 at 12:40 pm
        its obvious. u r not targetting at customer needs inspite of having world class designs and models. a consumer is looking for convenience, comfort with economy. u can see a change in buying behaviour for maruti. amt is in super demand. your upmarket version nexon, comes with an old time indian mentality of manual transmission. y shud i buy it when i know people will make a fun of me.
        Reply