IMF Outlook
Chandra is confident of a TAMO turnaround by 2019…
Source: Bloomberg Quint
ON 31st July 2018, Tata Motors reported its worst quarterly loss in 9 years. The quarterly loss of Rs.1902 crore was largely driven by below par performance from JLR. Firstly, after the Volkswagen fiasco, the pressure on diesel cars in Europe is just too high. Secondly, China is deferring purchases of cars and waiting for lower tariffs. But Chandra has a plan. Here is how…
Cost cutting at JLR…
Chandra’s strategy to turnaround JLR, which is literally the lifeline of Tata Motors, is predicated on 2 strategies. Firstly, the plan is to aggressively cut costs. Cost cutting would encompass a broad gamut of factors. It would imply rightsizing the operations, cutting down on overheads, getting more revenue per employee, shifting to low-cost locations etc. With $20 billion in annual revenues, even small shifts in the cost structure can be instrumental in a turnaround. Of course, BREXIT will be an overhang!
Big push to electric cars…
What Chandra could be really betting on is the big push towards electric cars. With fossil fuels being too volatile and diesel coming under environmental stress, the problem is real. Tata Motors has already identified 20 cities where it sees the potential to penetrate the electric car market in a big way. The electric car technology is still in a nascent stage and is yet to be tested from a mass production point of view. However, Tata Motors has already identified that as the technology of the future in the auto industry. In fact, the company has already embarked on a massive expansion plan on the front of electric cars. Chandra has himself expressed confidence that by 2020 most of their cars will be electric cars. The big challenge for JLR is twofold. It needs to diversify out of diesel and it also needs to penetrate the Chinese market. The big push to electric cars may help Tata Motors address both these issues!
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