Tata Motors will invest up to INR 60 billion (€1.1 billion) in its automotive operations by 2009. The majority of this money will be spent in new product development including the ambitious INR 100,000 (approx €1,900) car. Tata Motors’ current line-up of passenger vehicles is reaching the end of their lifecycle and the company needs to speed up the work on new platform development.
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Tata Motors’ mainstay, the Indica, was introduced in late 1998. It underwent a mid-life facelift in early 2004. Meanwhile Tata Motors has been introducing new bodystyles on the Indica mechanicals including the very popular Indigo saloon and the Marina estate models. Tata Motors now plans to introduce a replacement Indica platform in 2007.
A big chunk of the investment is also aimed at the development of the INR100,000 car, the Tata Motors CEO’s dream project. The car is now reaching the early prototype stage and Tata wants to introduce it into the market in 2007.
Since its business in commercial vehicles is considered cyclical, the company plans to hedge it by increasing the width of its product portfolio. Tata recently entered the small commercial vehicle segment by introducing the ‘Ace’.
Along with product augmentation, to increase sales volumes Tata is striving to enter new markets globally.
Part of the funding for the planned investment will come from the Foreign Currency Convertible Bonds (FCCBs) that Tata Motors had raised in the international market in 2004. The funds raised from the international offerings have been partly utilised for refinancing the acquisition of Tata Daewoo Commercial Vehicles.
Deepesh Rathore / Tilak Swarup
