At Pimpri, Tata Motors is preparing for a fireworks of output

More money and more attention is going to the passenger vehicle unit as the company ramps up R&D. Reuters

Tata, a global name since it bought Jaguar Land Rover in 2008, is losing traction at home as underwhelming product tweaks, heavy discounts and slumping capacity utilisation mark a painful 18 months for its passenger division.

Not since the 2008 Nano, the world’s cheapest car, has Tata unveiled a head-turning passenger vehicle, and not since the Indica’s launch in 1998 has it set the Indian market alight. Now, the company is heading back to the drawing board.

More money and more attention is going to the passenger vehicle unit as the company ramps up R&D, ditches a failed product strategy and prepares to enter the mini SUV segment and reboot the so-far underwhelming Nano.

“We have done something very innovative that will allow us to respond more positively,” said Tim Leverton, Tata Motors’ head of research and development. “You’ll see, over the next 12-18 months onwards, a fireworks of output.”

Tata will pour more than Rs 7,500 crore into the passenger vehicle business over the next five years. Less than 30 percent of that has been earmarked for facilities or upgrading hardware, leaving the rest for new products.

“The business is understanding that’s a heavy investment to make,” Leverton said. “But it needs to be made.”

Tata desperately needs a new hit model to arrest its sliding sales and eroding market share. A slew of new variants to combat competition from global brands will see it bin its inflexible past strategy of one car per market segment.

The success of the new drive will hinge on how soon Tata can bring fresh designs and ideas to market. That could take time.

“We’re definitely not factoring in a revival in their market share for the next two to three years. We don’t see any major new products … launched over the next two to three years,” said Jinesh Gandhi, auto analyst at Motilal Oswal Securities in Mumbai. “It’s going to be an uphill task for them.”

Tata’s car sales fell 8 percent in the April-November period from a year earlier, as main rivals Hyundai Motor and Maruti Suzuki posted increases.

The company relied on Jaguar Land Rover for 90 percent of its consolidated profit in the last financial year. The slowdown in its domestic business is seen as a drag on its value.

Tata Motors has a 12-month forward price to earnings ratio of 7.4, according to Thomson Reuters StarMine, against 17.2 for Maruti Suzuki and 9.2 for BMW AG.

“For sure new products are the source of growth and interest in our market,” Managing Director Karl Slym told Reuters. “And so product focus is and should always be a priority.”

The appointment this summer of Slym, a former General Motors executive, itself marked a shift. His two predecessors were former heads of Tata’s commercial vehicle business

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