Tata Motors pins hopes on twin-track approach

Tata Motors has set its sights on being an “unconventional global player” in the automotive industry, drawing out important benefits from its twin bases in India and Britain, according to Carl-Peter Forster, the chief executive and a German car industry veteran.

Mr Forster concedes that the combination of operations at Tata Motors – part of India’s Tata industrial group, and the country’s largest automotive supplier – is unusual by the standards of the global vehicle industry.

Tata has a large commercial vehicles business in India and a solid position in cheap and small cars built around its Nano vehicle, the brainchild of Ratan Tata, the Tata Group’s chairman.

Tacked on to this is UK-based Jaguar Land Rover, which specialises in relatively sophisticated cars at the expensive end of the market. Tata bought JLR from Ford Motor three years ago for $2.3bn as part of a plan by Mr Tata to make his group more global.

“We have a combination of a low cost base and a rapidly growing market in India, and a strong technological position in Britain,” says Mr Forster. “That gives us a lot of advantages which we can build on.”

An aeronautical engineer who previously ran General Motors’ operations in Europe and who also worked at BMW, Mr Forster was recruited to Tata Motors last year by Mr Tata as part of an effort to inject international management and engineering expertise at the top of the Mumbai-based company.

Mr Forster bases much of his hope for future growth on connections between the company’s 7,500-strong engineering team. Of these people, 4,000 work in the UK for JLR, with the rest mainly in India.

The company plans to add another 1,000 to the UK engineering group, part of a £5bn ($8.2bn) effort in the next five years to bring new vehicle models to JLR’s product range, while also increasing “at a rapid rate” its cadre of India-based engineers, Mr Forster said.

One idea for mixing the efforts of the Indian and UK groups involves expertise in fields such as novel transmissions or turbocharger-based fuel compression. Both of these are being developed by JLR to try to make versions of cars that emit less carbon dioxide.

The skills in these fields could be linked to fresh concepts for lightweight materials – which also have a role in low-emission vehicles – that have been developed in India as part of Tata’s project to build the Nano.

Ian Fletcher, an automotive analyst at IHS Global Insight, a consultancy, said Mr Forster’s strategy had “some credibility” as a result of the potential that existed for collaboration between the Indian and UK parts of the business.

“For instance, it is fairly easy to visualise the company in the next few years introducing a new series of models that could fill the gap between its small cars made in India and the vehicles at the luxury end of the market that JLR is making.”

In the year to March, Tata Motors produced 1.1m vehicles – a small figure by the standards of the world’s biggest automotive businesses such as Toyota and Ford.

Of the total, slightly less than half were medium and heavy trucks, of which the company is the world’s fourth-biggest producer. The company’s car output during the year of 512,000 vehicles was split about equally between operations in India and Britain.

As part of Mr Tata’s plans to boost Tata Motors’ overall engineering effort, the company is forming closer links with several small UK-based technology businesses. For instance, it has taken a minority stake in Bladon Jets, a maker of small “micro-turbine” engines that use ideas borrowed from jet engines to provide greater thrust. It is also collaborating with Torotrak, which is developing new gear boxes.