The Hindu Business Line : Tata-Ford deal may not help new vendors

New Delhi/Chennai March 28 Hailed for creating the world’s cheapest car Nano, Tata Motors may not be able to immediately replicate the success in turning around Jaguar and Land Rover.

Tata Motors, along with its component makers, succeeded in reducing the cost for Nano. But considering Ford’s existing supplier base for the two marques already has the technology, for Tata Motors’ to reap benefits of its low cost development may take some while. At present Ford Motor Co has Indian suppliers like Rico and Amtek.

According to the ACMA supplier guide, Visteon Automotive System India also supplies to the two brands.

Rico Auto, for instance, has been supplying to Jaguar and Land Rover for the past five years. “ We have been supplying to Ford for the two brands and there are other Indian companies too. It is a great opportunity,” said Rico Auto, Managing Director, Mr Arvind Kapur.

Amtek Auto too has supplied components for the two products since the last ten years out of its UK facility. But with Mr Ratan Tata’s commitment towards maintaining the brand and not bringing any major change in the supplier base, it may not spell any immediate benefit to some of Tata Motor’s existing vendors who may have set their eyes on the business.

“I don’t see any immediate benefits to Indian vendors with the commitment Tata Motors has towards the brand and management. May be in the long term for some components Indian companies could get opportunity as tier 2 or tier 3 suppliers. But Ford’s existing suppliers would already have the technology and expertise for each component.

And it is not easy to change that,” said Dr Surinder Kapur, Chairman and Managing Director, Sona Group.

The argument was echoed by one of the existing Indian supplier of the marques. “ Even the current component makers are selling parts for Jaguar and Land Rover from their UK facility.

Moreover, considering the freight costs, even if there is any opportunity it would be only for those domestic component makers who either have a production facility or a presence through a joint venture partner,” said a company official who did not want to be named.

The official further said that while Tata Motors would keep Ford’s existing supplier base intact, for the Indian vendors there could be opportunities at a time of new product development or when the company decides to customise a product like Jaguar and Land Rover for the domestic market.

More Stories on : Cars | Mergers & Acquisitions | Tata Motors Ltd

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page