Tata Motors shelves high-end car plans; to focus on turnaround

Six months after launching a new subdivision to focus on performance cars, Tata Motors said it is putting brakes on the TaMo division, which showcased its sports car RaceMo at the Geneva Motor show in March.

''TaMo is one of the nice-to-have projects. We have reached a stage where we can easily launch it but at this time we have put it in the fridge. Whenever time, priorities and money allows, we are going to bring it back,'' Tata Motors managing director chief executive Guenter Butschek said.

In several interactions with the media in Mumbai on Monday, Butschek indicated that the company's current cost structure in the passenger vehicle segment is quite high and the priority is to cut down costs to boost sales. Two weeks ago Tata Motors announced the end of its tie-up with the Volkswagen group's Skoda arm Volkswagen Group to jointly develop a small car platform.

Butschek scotched media speculation that his initiatives to turn around India's biggest automotive company have been shelved as well as rumours of his departure from the firm, which he expects to swing to profit on a standalone basis in FY18.

''I'll never ever run away from my task,'' Butschek told The Economic Times. ''The rumours flying around are not true.

''We are crafting this turnaround. The whole decision was taken at the end of May, beginning June and the plan was presented to the board in the beginning of July,'' he said on the roadmap for the project.

Asked whether there is a thaw in his relationship with chairman N Chandrasekaran after initial frostiness, Butschek said that was an inappropriate word to describe the then mood.

''Scepticism was more like it,'' he acknowledged, saying that anyone would have been sceptical, looking at the company's recent financial performance.

Butschek said that the company would continue to work on its Advanced Modular Platform (AMP) which it was to develop jointly with Skoda, and will launch its first hatchback based on the platform in 2019. The company hopes the platform, which would be used to build other models as well, would help reduce cost and provide economies of scale.

''We are crafting this turnaround. The whole decision was taken at the end of May, beginning June and the plan was presented to the board in the beginning of July,'' he said on the roadmap for the project.

A day before its annual general meeting, Butschek also sought to highlight the company's plans to reboot its commercial vehicle division, the bread and butter for Tata Motors.

''Year 16-17 was largely disappointing. Yes we have put the right actions in place but we need to accelerate because we don't have 2-3 years. We need to stop bleeding in terms of market share loss. We need to stop bleeding financially,'' Butschek said adding that the company hopes to grow its market share in the CV segment by 5 per cent by the end of the fiscal.

''We hope to get a lot more than Rs1,500 crore of potential bottom line improvement with recurring benefits for future years. We expect benefits coming out of a number of internal actions focused on cost reduction, notably aggressive material cost reduction, productivity improvement, headcount reduction etc. Hopefully, the total impact on bottom line will be much more,'' Butschek said.

Butschek also acknowledged that some of its bold steps to restructure the organization have not gone too well. This includes the company's plan to remove all designations.

''We underestimated the cultural readiness. People complained about the removal of their designation after working for more than a decade at the company. So we have decided to continue with designations at five levels instead of the previous 14,'' Butschek said.

Butschek said the company will be very aggressive this year in terms of launching new CV products and there will be zero tolerance for delays in launches, something that he said cost the company significant opportunity loss last year.

''On the commercial vehicle side also we have gaps. We have the widest portfolio but with low degree of commonality we have not been able to leverage the volume to the extend we require,'' Butschek said.