Will Tata Motors get to piggyback Jaguar Land Rover?

With the domestic, Tata brand passenger car business not really taking off, Tata Motors appears to be looking towards Jaguar Land Rover to bring in the spoils.

As per the company’s latest annual report, assembly operations have begun for the Land Rover Freelander in India and will be expanded. But chairman Ratan Tata is now thinking of manufacturing JLR products in China.

The expansion of JLR beyond India and the UK comes at a time when Tata Motors’ domestic car business is losing market share.

As per the report, Tata Motors lost share in both mid-sized cars and utility vehicles/SUV category last fiscal. The company’s passenger car sales growth was only 23% against 29.8% for the car industry in 2010-11 and it lost 0.7% share of the market.

Tata has spoken of revitalising the company’s dealer network and improving market share this fiscal. But parts suppliers tell us that production of the Nano is again down to less than 200 cars a day at Sanand, Gujarat, and with inventories piled up at showrooms, its sales have begun to slow.

Tata Motors’ share in mid-sized cars fell to 23.7% (25.8%) and in the UV/SUV category to 12.4% (13.2%) in 2010-11. The only saving grace was the small car (mini and compact) segment where share improved to 13.3% (11.6%), perhaps due to robust sales of the Nano in some months.

But the brands of JLR continued to do well. Tata says in the report: “Assembly operations in India have commenced for the Land Rover Freelander. Assembly of other Land Rover products is also under consideration. To optimise the synergetic strengths between JLR and Tata Motors in India, an examination is also underway on a joint engine development programme which would have manufacturing facilities, both in the UK and India. The company is also considering options for assembly and localisation of selected products in China, which has become an important market for the company.”

“China has emerged as the world’s largest automobile producer. Its production of 13.8 million cars in 2010 accounted for 24% of world production,” Tata said in the report.

Then, not just the domestic passenger car business but even the Tata Daewoo Commercial Vehicles (TDCV) business floundered last fiscal. During the first half of 2010-11, domestic sales were severely impacted because of financial crisis of TDCV’s main distributor and the second half of the year recorded lower exports.