Tata Motors. Profile of an Indian Car Company in Trouble

John Horner
by John Horner
tata motors profile of an indian car company in trouble

India’s Tata has gone from darling to dumpling in just a year. The high profile Nano People’s Car project still hasn’t gone into production, and the $2.3b purchase of Jaguar and Land Rover now seems spectacularly ill-timed. Business Week recently covered the story with these great opening notes: “What a difference a year makes.” India is in the throes of its own economic crisis; thanks to high inflation, high interest rates, tight credit markets, excessive corporate debt and a suddenly spending averse middle class. Pretty much like most places in the world, but a little different.

The Nano project crashed into a virtual brick wall last year when local protests caused Tata to abandon the nearly completed Nano production facility; after investing $350m . . . and before building any saleable cars.

Meanwhile, Tata’s big dog status in India’s commercial vehicle market (over 60 percent share) became a liability when that market plunged precipitously (40 percent!). India faces its first manufacturing and services exports decline in modern history.

Government spending, however, is being ramped up to soften the blow to Tata. Ergo: “On Wednesday, the company bagged a $450 million, 12-year contract to build and maintain buses for the city of New Delhi, which is in the midst of upgrading its infrastructure.”

Sounding familiar yet?

While all that is going on at home, the expensive short term bridge loans used last year to temporarily finance the Jaguar/Land-Rover purchase are coming due with no real prospects for replacing them. Although the UK has announced loans to keep the British auto industry afloat, it isn’t clear if Tata will be able to get its mitts on any of that money to pay down those bridge loans.

The usual unnamed sources at Tata are said to have said: “Of course, we plan to apply for as much help as we can get under that program, but the indication we’ve gotten from the [government officials] there is that the loans are intended to help keep production lines running, not directly pay off accumulated debt.”

The rapid expansion of Tata on the backs of a booming home market, executive enthusiasm and easy credit markets has put the company in dire stress. But, hey, Tata can take some small comfort that it is in better shape than outsourcing titan Satyam Computer Services, which has seen three executives (so far) carted off to jail in a billion dollar accounting scandal.

Compared to that, Tata is in good shape. Rut row.

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2 of 24 comments
  • Kurt. Kurt. on Feb 03, 2009
    Geo. Levecque asked "why should the UK Taxpayer pay for them to make Cars?" Because those cars are STILL built in the UK, with (some say) UK workers. If Tata has to close those plants, the UK will be paying anyway with unemployment and lost wages in their communities. I could be way off base here but aren't the Rover engines built in Germany? Maybe the Germans will fess up some cash too? Time to go a beggin'...

  • Jack Baruth Jack Baruth on Feb 03, 2009

    I admire Mr. Tata for his determination to put his people on wheels, but the Nano and its inevitable competition would have amounted to a climatological apocalypse. Assuming you believe in AGW, that is. It would be better, from a resource consumption standpoint, to simply wave a magic wand and turn every new car on sale in the United States into an Escalade ESV.

  • Art Vandelay Dodge should bring this back. They could sell it as the classic classic classic model
  • Surferjoe Still have a 2013 RDX, naturally aspirated V6, just can't get behind a 4 banger turbo.Also gloriously absent, ESS, lane departure warnings, etc.
  • ToolGuy Is it a genuine Top Hand? Oh, I forgot, I don't care. 🙂
  • ToolGuy I did truck things with my truck this past week, twenty-odd miles from home (farther than usual). Recall that the interior bed space of my (modified) truck is 98" x 74". On the ride home yesterday the bed carried a 20 foot extension ladder (10 feet long, flagged 14 inches past the rear bumper), two other ladders, a smallish air compressor, a largish shop vac, three large bins, some materials, some scrap, and a slew of tool cases/bags. It was pretty full, is what I'm saying.The range of the Cybertruck would have been just fine. Nothing I carried had any substantial weight to it, in truck terms. The frunk would have been extremely useful (lock the tool cases there, out of the way of the Bed Stuff, away from prying eyes and grasping fingers -- you say I can charge my cordless tools there? bonus). Stainless steel plus no paint is a plus.Apparently the Cybertruck bed will be 78" long (but over 96" with the tailgate folded down) and 60-65" wide. And then Tesla promises "100 cubic feet of exterior, lockable storage — including the under-bed, frunk and sail pillars." Underbed storage requires the bed to be clear of other stuff, but bottom line everything would have fit, especially when we consider the second row of seats (tools and some materials out of the weather).Some days I was hauling mostly air on one leg of the trip. There were several store runs involved, some for 8-foot stock. One day I bummed a ride in a Roush Mustang. Three separate times other drivers tried to run into my truck (stainless steel panels, yes please). The fuel savings would be large enough for me to notice and to care.TL;DR: This truck would work for me, as a truck. Sample size = 1.
  • Ed That has to be a joke.