Tata Motors reworks production math as volumes stall

Apr 17 2014, 00:43 IST
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Tata Motors shares closed down 0.28% at Rs 411.20 on Wednesday on the BSE. Reuters Tata Motors shares closed down 0.28% at Rs 411.20 on Wednesday on the BSE. Reuters
SummaryTata Motors shares closed down 0.28% at Rs 411.20 on Wednesday on the BSE.

Tata Motors is restructuring production across its six factories to improve margins and plant viability, given that volumes have been falling for more than two years. As part of the move, India’s largest automaker by turnover will shift production between plants, shut down assembly lines and add products at factories previously dedicated to other models.

Tata Motors’ passenger vehicle (PV) sales fell 15% to 3.14 lakh units in FY13 and 37% to 1.98 lakh units in FY14, while commercial vehicle (CV) volumes were down 6% to 4.44 lakh units in FY13 and further down 28% to 3.17 lakh units in FY14.

The Nano factory at Sanand in Gujarat has a capacity to build 20,000 units a month, but rolls out only 1,000-2000 cars. Meanwhile, the company has shelved plans to launch a diesel Nano — which was almost fully developed — citing high diesel prices that have made the project unviable. With output at Sanand

running woefully below capacity, Tata Motors is planning to build a high-volume model (a new small car based on the ‘X0’ platform) here, to help improve the plant’s viability.

“From 2015, Tata will make a new small car at Sanand to replace the Indica eV2, which is over a decade old in design. Priced at R3-4 lakh, this car will compete with models like the Maruti WagonR,” a person close to the development said.

A Tata Motors spokesperson said: “We have diesel technology that is readily available. Nano remains an important brand and we constantly evaluate the best market-suited variants for it, but given the changing dynamics of fuel pricing in the country, we are not immediately focused on announcing a go-to-market date for this.”

Changes are also under way at Tata’s PV facilities in Pune. Industry sources said while the Indica Vista hatchback was previously made at the Ranjangaon plant (where Tata holds a 50% stake along with Fiat), its replacement model Bolt is being shifted out to Tata’s own plant nearby in Pune.

This move will mean higher realisation on the Bolt for Tata, as it does not have to make payments to Fiat for sharing the plant. However, Zest, Tata’s new compact sedan, will continue to be made at Ranjangaon alongside Fiat’s Linea and Punto models.

Gaurav Vangaal, automotive analyst for light vehicle forecasting at IHS said: “Tata had been working rigorously on the Nano diesel project to penetrate the lower diesel segment. If

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