Tata Motors and JLR facing headwinds but we are prepared to grow, says N Chandrasekaran

Tata Motors and its British subsidiaries Jaguar Land Rover are facing massive headwinds but both the businesses are getting future-ready, said Natarajan Chandrasekaran, Chairman of Tata Motors.

Addressing shareholders in the 73rd annual report Chandrasekaran said the Indian automotive industry is fraught with mid to long-term challenges such as a shift to electric vehicles, new safety and emissions norms and shared mobility.

“Tata Motors and Jaguar Land Rover are both iconic companies and brands. We are together, preparing ourselves to leverage growth potential of the Indian economy, while facing the headwinds of uncertainty due to market cyclicality, Brexit and the decline in diesel demand,” said Chandrasekaran.

Chandrasekaran has put his weight behind the plans laid down by Tata Motors' senior management led by Managing Director Guenter Butschek to achieve a sustainable turnaround of operations.

Recently the company announced its decision to do away with some projects that were proving to be commercially unviable for the future. This will help the company focus solely on profitability along with the growth of market share.

“The Indian auto industry is not without its challenges, including adapting to a structural shift towards electric vehicles (EVs), shared mobility options with ride-sharing permeating the urban landscape, a pan-India shift to Bharat Stage-VI emission by 2020 and enhanced safety norms. As such, we will have to be more agile than ever and work towards being future-ready,” said Chandrasekaran.

As for EVs, Tata Motors is gearing up to roll out a new-age platform that will be flexible enough to accommodate electric and hybrid powertrains apart from the regular petrol and diesel options. With the current range, Tata Motors has already developed electric variants of Tiago and Tigor models and the two will be commercially available shortly.

Stakeholders have raised concerns over the deteriorating performance of Jaguar and Land Rover. The two brands clocked a growth of just 1.7 percent last financial year in retail volume to 614,309 units over 604,009 units sold in 2016-17. Rival Mercedes-Benz grew volumes by 10 percent to 2.3 million units while BMW posted growth of 4.2 percent to 2.09 million during 2017.

“Some of the key operating markets for the group are faced with diverse market dynamics requiring specific interventions to ensure sustainable profitable growth. North America is nearing the peak of the demand cycle and growth is likely to remain muted in the near term. While regulatory restrictions on diesel, market cyclicality, Brexit and taxation in the UK pose specific challenges in Europe and UK, the key Asian markets of China and India offer high growth opportunities led by GDP growth, strong domestic consumption and favorable demographic support,” said Chandrasekaran.

Last year, Tata Motors posted consolidated revenues of Rs 2.94 lakh crore with worldwide sales of 1.22 million units. It incurred a capital expenditure of Rs 42,672 crore last year. It also did more than 50 launches in commercial vehicles, two in passenger vehicles and nine in Jaguar Land Rover.

Last month, JLR announced an investment of 20 billion pounds (Rs 1.8 lakh crore) over the next five years to build its future pipeline of products that includes three new models, 100 upgrades, and a fully flexible vehicle platform. As per the plan from the current 13 product lines - seven models of Jaguar and six of Land Rover - JLR will progressively have 16 products by 2024 including the Jaguar i-Pace and the new Land Rover Defender. Additionally, the auto major will have 100 product actions during the same period.