Under the leadership of new CEO and MD Guenter Butschek, Tata Motors is moving ahead with new strategies. One of them is to enter into a string of 50:50 joint ventures with vendors of critical components.
The objective of the JVs is to consolidate the automaker’s vendor base and have better control over them. So far, the Indian automaker has been having only demand-supply relationship with its vendors but being their partners would lead to synergies and improved component quality.
The 50:50 JVs would involve Tata Motors co-investing in machinery and infrastructure. Such an arrangement will also help the brand build trust with its critical component suppliers. The JVs will also allow the company to reduce the number of vendors and increase the number of components sourced from each vendor. So the cost structure, in the long run, would be pocket friendly.
Also read – Tata Motors to add 10,000 women workers by 2018
Tata Motors has been recovering slowly from lackluster sales. The Tiago hatchback with fresh styling, attractive interior, first-in-class features and tempting price tag has had an encouraging start. The momentum is being sustained for now. The company is also having several interesting products in its pipeline including a sedan version of the Tiago (codenamed Kite 5), Hexa and Nexon.