Times of India reports that Tata Motors is looking to sell up to 49% of their stake in passenger car business to a foreign brand
Indian automaker Tata Motors is looking forward to inducting a new partner to share its passenger vehicle (PV) business in the country, reveals Times of India. The ‘foreign strategic partner’ will receive up to 49 per cent stake of Tata Motors’ PV operations. This accounted for almost four per cent (nearly Rs 10,300 crore) of the group’s turnover in FY2020. Earlier this year, Tata Motors had shared plans to subsidiarise its automotive business after transferring all assets, IPs and staff directly into the subsidiary for Rs 9,417 crore.
As per the report, Tata Group has been in talks with various European and East Asian automotive companies for forming the partnership. This includes Groupe PSA, Geely (or Zhejiang Geely Holding Group Co.), Changan Automobile and Chery Automobile. Groupe PSA has apparently backed out after partnering with FCA (Fiat Chrysler Automobiles) to form ‘Stellantis’; a 50:50 merger expected to complete by the first quarter of 2021.
The French automaker will soon launch its first made-in-India product, Citroen C5 Aircross compact crossover. Production has already started and one can expect the vehicle to hit Indian roads by early next year. It primarily rivals the Hyundai Creta, Kia Seltos and Nissan Kicks while being a compelling alternative to names such as Tata Harrier, MG Hector and Jeep Compass.
On the other hand, the Chinese players stepped away due to border tensions and rising ‘Boycott Chinese Goods’ movement in India. Interestingly, Tata Motors’ upcoming Blackbird (internal codename) compact crossover will be based on Chery’s Tiggo 5X platform. Jaguar Land Rover, Tata Motors’ premium subsidiary, is in a 50:50 partnership with Chery Automobile to manufacture products at Changshu plant, China.
Tata Motors acquired Jaguar Land Rover (JLR) from Ford Motor Company back in 2008 for approximately 2.3 billion US dollars. JLR is not doing particularly well on global markets and a new partnership for Tata Motors could prove helpful.
The report states that Tata Motors believes that the Indian automotive scenario is undergoing a major transformation phase. Stringent emission norms, push towards electric or emission-free products, autonomous technologies and increased preference for SUVs (mostly crossovers in various shapes and sizes) demand a strategic partner that can supply enough know-how to meet all these challenges.
Furthermore, Tata Motors has not been seeing good sales figures in recent times despite having arguably some of the best products in the affordable segment. July 2020 was the first month where Tata managed to post good sales. The Indian automotive industry is still making a gradual recovery from COVID-19 pandemic and its initial lockdown protocols.
Tata Motors Media Statement
“All such published news about ‘Tata Motors to sell up to 49% stake in PV Business’ and the names of potential partners/investors mentioned is incorrect and misleading.
Firstly, TML is India’s foremost home grown auto company. Its products are receiving strong customer response with its best-in-class safety, stylish design and superior driveability. Over the years, initiatives taken by Tata Motors have and will continue to strengthen India and its auto sector.
In March 2020, TML had announced the intent to subsidiarise its PV business as the first step towards securing mutually beneficial strategic alliances that provide access to products, architectures, powertrains, new-age technologies and capital.
Securing a mutually beneficial alliance is a priority. However, it is not an imperative for today but an opportunity to be secured for tomorrow.
The imperative for today is to Win Sustainably by delivering market beating growth and positive free cash flows by delighting our customers with exciting products and exceptional service while continuing to drive a strong cost savings agenda.”