Tata warns of bumpy ride for car makers

Tata Motors chairman says crisis in western Europe may dampen demand for passenger cars.

Tata Motors Chairman Ratan Tata has warned of a challenging year ahead for car makers in India even as the automotive industry continues to grapple with diminishing demand.

“Looking ahead, I think the coming year will probably pose a considerable challenge. We all know western Europe is going through a relative crisis in terms of currency. All this is expected to dampen the demand for passenger cars,” Tata said while addressing shareholders at the company’s 66th annual general meeting here on Friday.

Sales of passenger cars of the company in the domestic market declined 10.7 per cent to 69,529 units during the first quarter of this financial year, as against 77,858 units a year ago. While commercial vehicles posted 13 per cent growth in sales in the first quarter, Tata cautioned any decrease in the government’s spending on infrastructure would impact their sales.

Tata also said the company should use the economic downturn as an opportunity to leverage low-cost manufacturing capabilities through design and manufacturing.

With increased presence of several international automotive companies in India, Tata said efforts were being made to protect its share in the domestic market.

“We need to also fill up the various product gaps that we may have. We are working on joint products with Jaguar and Land Rover and with Tata Daewoo”.

Tata Motors is looking to tap the extensive dealer base of JLR globally while exploring synergies with it. JLR currently serves 160 markets globally. Tata also assured the shareholders over the company’s loss-making joint venture (JV) with Italy’s Fiat, saying efforts were underway to turn around the operations.

“The JV was created with a certain set of assumptions. The assumption was basically that the JV would be to introduce Fiat products that we would market and we would produce products for ourselves,” Tata said.

“Those assumptions in terms of volumes did not work out, more so for Fiat than for us because there was a downturn and they made an assumption on planned demand which did not materialise. Both Fiat and we are relooking at the contractual undertaking. I hope we resolve this,” he added.

He said Tata Motors was looking to set up an vehicle assembly facility, especially for the Nano in Indonesia.

The company is looking to tap the potential demand base for the ultra compact car in the Southeast Asian market. In addition, it will set up an assembly base in Brazil to cater to the Latin American market.