Tata Motors is India’s largest vehicle manufacturer, but its debt remains high. As of September 30, total debt for its India business is more than Rs 23k crore. If we account for the company’s JLL (Jaguar Land Rover) business, total debt comes out at around Rs 95.5k crore.
Tata Motors may lead in commercial vehicle sales, but its passenger vehicles business is not performing as desired. From April to November 2019, the company’s market share has come down to 4.59%. In the year ago period, market share was 6.19%. During this period, sales have fallen to 86,412 units, a drop of -39%. In November 2019, Tata Motors was ranked at sixth place in the list of top carmakers in the country. YoY sales had fallen -43.14%, from 18,290 units in November last year to 10,400 units in November 2019.
There are many reasons for Tata Motors’ downward trajectory, one of which is increasing competition from new rivals. Another factor is the huge cost of upgrading the entire portfolio to BS-VI emission norms. It is possible that partnership with Chinese firms can help overcome these challenges. Collaborations with Chinese firms could include technology transfer, R&D for new engines and electric vehicles, and development of new platforms.
On their part, Chinese firms will find it advantageous to partner with Tata Motors, as the company already has large manufacturing facilities and nationwide dealer network. After MG Motor (owned by China based SAIC Motor Corp.), other Chinese carmakers are also looking to launch operations in India. These include Great Wall Motors Co. Ltd and Changan Automobile Co. Ltd. It is possible that Tata Motors may be in talks with such companies for new joint ventures.
Collaborations in the automotive space are nothing new and there have been several of these in the past. Earlier this year, we had witnessed a joint venture between Mahindra and Mahindra and Ford Motor for development of combustion engines and electric vehicles. Globally, we can also see Toyota and Suzuki partnering to share their product portfolio and work together for development of new combustion engines and electric cars.
It may be recalled that in 2017, Tata Motors had evinced interest in partnering with Volkswagen AG. However, those plans did not fructify. Better results could be obtained with Chinese firms, as they are looking to expand operations to high-potential countries such as India.
With a joint venture, Tata Motors will be in a better position to tackle upcoming challenges such as BS-VI upgrade, CAFE norms and the inevitable shift to electric vehicles. However, an official statement about talks with Chinese firms has not been provided by the company.