Tata Motors is actively scouting for a partner for its passenger vehicle business, aiming further growth in the next decade. The next decade will see a huge investment into new technologies, regulations etc. In this scenario, having a business partner for its passenger vehicle business will help Tata Motors to streamline its operations and grow further, believes the homegrown auto major.
The automaker is also mulling the idea to carve out its passenger vehicle business unit (PVBU) as a separate standalone unit, to streamline its business operations. Interestingly, earlier this year, Tata Motors board approved to form a separate entity to house the PV business including the electric vehicle vertical as well.
In an interview to PTI, Shailesh Chandra, President, PVBU, Tata Motors, said that the whole purpose of subsidiarisation is to actively look for a partner because collaboration can unleash a bigger potential in the next decade which is going to see significant investments in new technologies and regulations.
Such a collaboration would also help in reducing product lifecycles and enhance the intensity of new product launches, eventually resulting in further growth. “All this requires huge investments and agility is also the key. So this is something which we are actively looking into,” Shailesh Chandra added.
However, Chandra also cleared that the automaker is looking for a partner to create assets and capabilities with a win-win situation for both. While there is no specific timeline for collaboration with a partner, the formation of separate legal entity for the passenger vehicle business would be accelerated in a year, indicated Tata Motors.
Since the world auto industry has been facing the crisis due to the economic meltdown and lately the Coronavirus pandemic, several auto majors have indicated the potential of partnerships with other OEMs, startups. The merger and acquisition have been accelerated in the auto industry in the wake of the economic crisis and Tata Motors aims to be a part of that emerging trend.
Globally one of the major M&A development was the formation of Stellantis, by the merger of Groupe PSA and FCA. The meger between these two auto giants from two sides of Atlantic will create the biggest automaker in the world.
Apart from that, we have seen several auto OEMs partnering with startups. For example, we can name the partnerships like BMW-ParkMobile, Daimler-Cinteo, Daimler-Flinc, Ford-Autonomic, Ford-TrancLoc, Groupe PSA-Carventura, Volvo-Garantibil etc.
In the last couple of years, Tata Motors has drastically updated its product portfolio. The automaker now sells new-age models like Tiago, Tigor, Altorz, Nexon, Harrier. Also, Tata Motors has entered into the electric vehicle segment as well with models like Tigor EV and Nexon EV. Apart from that, the auto OEM is also working on a host of new products, as hinted at the Auto Expo 2020.
With the new generation passenger vehicles, Tata Motors has posted double-digit growth during the first half of this fiscal, despite the Coronavirus crisis and lockdown-related woes. With this sales performance between April and September, Tata Motors has claimed to have grabbed 7.9% market share in the PV segment. With the PV segment witnessed 18% growth in the July-September quarter of FY21, the homegrown auto manufacturer hopes for further growth especially in the third quarter, majorly driven by the festive season demand.
Last year there was 20% degrowth in the passenger vehicle sales, as customers were waiting for the BS-VI clutter to be cleared. This year too, the two months of lockdown led to huge pent-up demand. Besides that, the preference for personal mobility over public transportation is lading to a sustainable demand. However, there are speculations that the demand would slump after the festive season.