With over 60 per cent market share in the domestic market, Tata Motors is now keen on spreading its reach to far-flung areas such as Latin America and Africa.
As India’s biggest vehicle making company by revenue, the Mumbai-based company had a few months ago opened an assembly plant for commercial vehicles in South Africa. Today, it is keen to use this base to establish a permanent presence in the fast-growing African market.
The 1945-founded auto major is currently looking at making similar strides in emerging markets such as Southeast Asia and Latin America, forming bases that would manufacture trucks and buses. This expansion is independent of the expansion undertaken by the passenger vehicle business unit.
At present, Tata Motors is holding talks with some of the interested parties. A more detailed plan will be disclosed when discussions fructify, stated a senior company official.
Ravi Pisharody, president of the company’s commercial vehicle business unit, said Tata Motors saw an opportunity in Africa, with South Africa being the centre point. “We also see an opportunity in Asean countries as a group. Then we see Latin America —the duties and emission norms keep changing.”
The South African plant, which is located at Rosslyn in Pretoria, does an assembly of semi-knocked down kits of light, medium and heavy commercial vehicles ranging from 4 to 50 tonnes. It has an annualised capacity of 3,650 vehicles and the company is weighing the option for further expansion. Based on the demand and growth of the markets within the African continent, Tata Motors may look at a full-fledged manufacturing operation in South Africa at a later stage. SUV market leader Mahindra & Mahindra is also keenly exploring options to expand operations in Africa, starting with Egypt. Over time, pointed out Pisharody, South Africa would cater to the entire African continent. “We do some export from here to that market. Once the scale picks up we will have to look at local sourcing of components. We will evaluate that option too.
“The local demand and competition also depends on the decision,” he added.
In the Southeast Asian market, the company currently has presence in two countries: South Korea and Thailand. There it is manufacturing heavy trucks and pick-ups. Tata Motors was initially planning to tie up with Iveco, the commercial vehicle arm of Italy’s Fiat Group, for assistance in expanding in the Latin American countries.
However, as break through has taken place in the talks, Tata Motors may eventually go solo in these markets.
On Tuesday, even as Tata Motors is celebrating 25 years of the 407 light commercial vehicle, its senior executives warned that the current economic situation will impact vehicle off-take in the near term, forcing customers to postpone their purchases.
“The medium and heavy cargo segment,” Pisharody said, “has suffered in the first half of this financial year but we have posted a growth.” But the light trucks, buses and tippers have “managed to grow”. Interest rates and inflation have impacted the sales in general, as people have been postponing their purchases, he added.
The company also cautioned that high raw material prices have constantly put pressure on operations, forcing it to make a revision in prices this month. Tata Motors raised commercial vehicle prices by nearly one per cent across its products.
“We have tried to offset the hike in raw material price in two ways: reducing costs internally and slight tweaking of price,” he informed. “As we have taken a price hike in October, there is no need for another hike for the time being.”