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Tata Motors & Indian Automobile Industry

Essay by   •  March 20, 2013  •  Case Study  •  1,089 Words (5 Pages)  •  1,601 Views

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INTRODUCTION

Established under the parent company, Tata Group, in 1945, Tata Motors Limited has become India's largest automobile company. It was the first Indian automobile company to list on the New York Stock Exchange. Tata Motors began manufacturing commercial vehicles in 1954 with a 15-year collaboration agreement with Daimler Benz of Germany. This partnership has led Tata Motors to not only become India's largest automobile company but also India's largest commercial vehicle manufacturer; the world's top five manufactures of medium and heavy trucks and the world's second largest medium and heavy bus manufacturer. Having just entered the passenger vehicles market segment in 1991, Tata Motors now ranks second in India's passenger vehicle market.

Tata has enjoyed the prestige of having developed Tata Ace, India's first indigenous light commercial vehicle; Tata Safari, India's first sports utility vehicle; Tata Indica, India's first indigenously manufactured passenger car; and the Nano, the world's least expensive car. A full timeline of Tata Motors Limited is supplied in Appendix A.

CURRENT SITUATION

COMPANY OVERVIEW

The Tata Motors group is a passenger and commercial vehicle manufacturer based in India. The motor group was established in 1945 as part of the larger Tata Group. They have long been known for their commercial vehicles and in the past ten years entered into the passenger car market. Currently, Tata Motors has a line of five passenger vehicles and a large line of commercial vehicles producing pickups, trucks, tractor trailers, tippers, and buses. Both product lines of the Tata Motors group have seen success, but much of this has been built upon the more deeply established commercial vehicle product line.

Tata Motors commercial line has been established for several years in many market segments such as Europe, Africa, The Middle East, Australia, Southeast Asia, and South Asia. Tata Motors has expanded their business and market share around the world through a series of acquisitions. In 2004, they acquired Daewoo commercial vehicle Company in South Korea which was South Korea's second largest truck manufacturer. This acquisition gave Tata Motors a significant presence in the Korean market. They have also entered into joint ventures with companies such as Thonburi Automotive in 2006, which allowed them to manufacture and market pickup trucks in Thailand. "We think it makes sense for Tata to expand through acquisition (as it did in tea and steel) than spend a decade to build the business" (Lehman Brothers). The commercial vehicle area of the business has certainly been how Tata Motors have built their reputation, with commercial vehicles accounting for 80-85% of company profits. They are beginning to employ a similar technique as they now expand into the passenger car business.

Tata Motors have been making global headlines in the auto industry lately; the largest news being their acquisition of Jaguar and Land Rover from Ford. "Tata paid 2.3 billion dollars to Ford for the two brands that cost Ford 5.3 billion" (Carty, USA Today). This is a major step for the company because it catapults them into the luxury car business which they are not known for at this time. Tata, like many new businesses it acquires, is allowing this new segment of the business to be run by previous management

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