Tata goes back to drawing board at stalled Indian car unit

Sun Dec 23, 2012 4:27pm EST
 

By Henry Foy

PIMPRI, India (Reuters) - Deep in Tata Motors' (TAMO.NS: Quote) largest factory, engineers don 3D glasses to play with car designs and prototypes projected from a 10-metre wide computer screen. Their quest? The Indian automaker's next blockbuster car model.

The research and development team's task is a pressing one. As they work, sections of conveyor belt and welding stations lay silent at the Pimpri factory and lines of white and silver Indica hatchbacks gather dust along service roads outside.

Tata, a global name since it bought Jaguar Land Rover TAMOJL.UL in 2008, is losing traction at home as underwhelming product tweaks, heavy discounts and slumping capacity utilization mark a painful 18 months for its passenger division.

Not since the 2008 Nano, the world's cheapest car, has Tata unveiled a head-turning passenger vehicle, and not since the Indica's launch in 1998 has it set the Indian market alight. Now, the company is heading back to the drawing board.

More money and more attention is going to the passenger vehicle unit as the company ramps up R&D, ditches a failed product strategy and prepares to enter the mini SUV segment and reboot the so-far underwhelming Nano.

"We have done something very innovative that will allow us to respond more positively," said Tim Leverton, Tata Motors' head of research and development. "You'll see, over the next 12-18 months onwards, a fireworks of output."

Tata will pour more than 75 billion rupees ($1.36 billion) into the passenger vehicle business over the next five years. Less than 30 percent of that has been earmarked for facilities or upgrading hardware, leaving the rest for new products.

"The business is understanding that's a heavy investment to make," Leverton said. "But it needs to be made."   Continued...

 
An engineer explains functions at a 3D design lab at Tata Motors plant in Pimpri, 160 km (99 miles) southeast of Mumbai, December 14, 2012. Tata, a global name since it bought Jaguar Land Rover in 2008, is losing traction at home as underwhelming product tweaks, heavy discounts and slumping capacity utilisation mark a painful 18 months for its passenger division. Picture taken December 14, 2012. REUTERS/Danish Siddiqui