Tata Motors & It's Long Term Plans

Tata Motors is in a mood to dominate the Indian auto industry, at least four wheeler wise. Whether they can upstage the Maruti group is something only time and strategy will tell. Known as a company that makes cars for the middle income sector Tata Motors was keen to shake off that tag aiming to diversify. The acquisition of Land Rover and Jaguar was of little surprise.

In the future Tata Motors will be launching it’s much publicized Nano. The one lakh rupee ‘People’s Car’. This will undoubtedly be the defining moment for the company and a turning point in India’s automotive sector.

The Nano is aimed at the lower and middle income sectors as was made clear by Ratan Tata. Tata is hoping that if Nano can take over as the market leader in this sector then careful branding and association of its Jaguar and Land Rover models can dominate the high income luxury sector. Add to this the well known reputation of Jaguar and Land Rover and the careful expansion of the Nano worldwide and Tata Motors should well be on it’s way to dominate the automotive sector.

The Nano will clearly be sold on a manufacturing basis. There is enough hype in the market to foresee the lack of a need to market it aggressively. The current idea in Tata Motors is to push the car as a sturdy vehicle capable of surviving on Indian roads and bring the experience of driving to a larger section of the population.

The two hindrances for the Nano are the large scale test for the product to survive ‘on road’. The car despite its cheaper price will be a hit only after it survives its first few months on the Indian roads. This is one reason why the price of Tata Motors’ stock on the Sensex has only held steady instead of surging phenomenally.

The other hindrance is the current state of fuel price fluctuation. For Tata this will be a smaller problem as it affects the entire industry. A rise in fuel prices will however force the consumer to change his preference from a 4 wheeler to a 2 wheeler in order to save more.

It is for this reason that Tata Motors have announced that they are interested in the idea of designing electric cars. This will not only nullify the problem on depending on the speculation of fuel prices but also open up a whole new sector in the market. The Tata electric car will be competing against the Reva which has been on the roads for quite a while and East Asian electric cars that have announced they are interested in an Indian foray.

To take it a step further Tata has also initialized plans for the manufacture of a hybrid car which it will market with Chrysler in the US. Should the electric car and the hybrid both of which will be sold on a pilot basis in Norway and the U.S respectively be successful then their foray onto Indian roads should only be a matter of time.

While these cars will be launched in 2009, Tata Motors’ current priority is most definitely to ensure the success of the Nano.