Tata Motors hives passenger vehicle business into separate subsidiary

Tata Motors said on Friday its passenger vehicle business is being hived off as a separate subsidiary with differentiated focus from commercial vehicle business.

"The board has in-principle approved to subsidiarise passenger business (including electric vehicles) by transferring relevant assets, intellectual properties and employees directly relatable to the passenger vehicle business for it to be fully functional on a standalone basis through a slump sale," it said in a statement.

However, certain shared services and central functions will be retained at Tata Motors to deliver cost efficiencies for the entire group.

"This decision is a first step in our plans to secure mutually beneficial strategic alliances for the domestic passenger business and help secure its long-term viability," Tata Motors said. "We expect the transfer process to be completed in the next one year."

The passenger vehicle business landscape is seeing a rapid transformation in the form of tightening emission norms, push towards electrification, enhanced disruptions from autonomous and connected technologies.

Additionally, said the automaker, India continues to remain an attractive market for global original equipment manufacturers while the aspiration levels of Indian consumer continue to rise, requiring stepped up investments in contemporary products in a competitive market.

Over the last few years, Tata Motors' passenger vehicle business has implemented a strong turnaround and launched a slew of products like Tiago, Tigor, Nexon, Hexa, Harrier and most recently the Altroz and Nexon EV.

However, the recent outbreak of COVID-19 virus increases the challenges faced by the business.

"In this situation, our first priority is to secure the health and safety of our people while continuing to serve our customers and securing the viability of our ecosystem," said the company.

"A move towards for immediate use subsidiarisation of the passenger vehicle business is the first step in securing mutually beneficial strategic alliances that provide access to products, architectures, powertrains, new-age technologies and capital."

Tata Motors said Shailesh Chandra will take over as President of passenger vehicle business from April 1. He will be assuming responsibility from Mayank Pareek who will retire by the end of April.