Tata Motors closed the March quarter in line with Street expectations, despite facing ones of its toughest years in recent history. Guenter Butschek, chief excutive officer and managing director (CEO and MD), told T E Narasimhan why 2019-20 is expected to be an extraordinary year for Tata Motors. Edited excerpts:
What is your outlook and strategy for the passenger vehicles (PV) industry? How many launches are on cards?
With the election results out, there is expected to be some certainty going forward, especially among the first-time buyers, who did not enter the market in the last five-seven months on account of political uncertainty. Apart from this, the much-talked-about transition from BS-IV to BS-VI has been the biggest challenge in the last few months. At the company level, we are prepared to meet the BS-VI deadline. With Turnaround 2.0 into play, we have strategised a renewed focus on the PV business by controlling costs, filling in product gaps and tapping the white spaces that will emerge. We have consolidated our vehicle platforms in PVs from six to just two – OMEGARC and ALFARC. We are set to introduce our premium hatchback Altroz in the market in the coming few months. The launch should help extend our current market share. This will be followed by the launch of our seven-seater SUV, codenamed H7X, alongside the BS-VI updates of our existing models towards the end of FY20.
Any plans to exit the small diesel car segment after BS-VI?
We have taken a two-step approach with regard to BS-VI norms that take effect on April 1, 2020, as well as the CAFE regulations that kick in during 2022. Of the two, BS-VI is more significant, in terms of its far-reaching effects across the industry. BS-VI already requires a technology step-change, which will particularly hit diesel engines. The compliance therein will particularly be more expensive compared to that required for petrol vehicles. If we set aside the price increase due to BS-VI, the narrowing price difference between petrol and diesel itself raises a pertinent question in terms of amortisation of higher cost of diesel cars. This becomes compounded by the expected price hike due to BS-VI norms. We are sceptical in terms of future production of small displacement engines upto 1.2 litres. But, in higher displacements of 1.5 litres and above used in mid-size and large SUVs as well as sedans, there is no other practical alternative to diesel. Petrol engines in that range will have a significantly higher fuel consumption. So, we are certain that high displacement diesel engines will remain a viable option.
What is Tata Motor’s electric vehicles (EV) strategy and FAME 2 orders?
Using Tata Motors’ in-house capabilities coupled with Tata group companies’ expertise and ongoing collaboration with other ecosystem players, we intend to offer a comprehensive range of EVs and other ecosystem solutions. At present, we foresee the primary market for EVs for the next 4-5 years to primarily be for the fleet segment. Tata Motors will have multiple products directed towards this segment. Currently, the Tigor EV, apart from serving the order by Energy Efficiency Services, is also being sold in the fleet segment. In future, we will have more products serving this segment and will be closely aligned to what the FAME2 scheme intends to promote. So far as the personal segment is concerned, we believe that progressive and rapid penetration of EVs in the next decade is not possible until the personal segment also adopts them. It is five-six times larger in size than the fleet segment.
How do you see the commercial vehicles (CV) industry performing this year?
One of the key focus areas in our turnaround journey is to be less vulnerable to volatility. Currently, we are in a muted demand environment. Hence, we need to understand our customers’ requirements and the market conditions for a sustainable growth. Also, based on past sales, one needs to evaluate the volumes and product mix at a micro level, to better understand what worked and predict the way forward.
What are your capex and investment plans?
Our annual capex remains the same and as per our policy we would not be able to share any investments plans.