M&M, Tatas step on gas to pursue global opportunities

When reports began doing the rounds recently that Tata Motors and Peugeot were coming together for a strategic alliance, shares of the beleaguered French automaker were up over three per cent.

They were promptly back to square one when the Tatas denied the news.

“It tells you what the Tata brand represents across the world. Investors perceived it as a reliable lifeline for Peugeot,” an auto industry veteran told Business Line.

The Tatas have been aggressively following a global strategy for all their companies. In fact, Philippe Varin, the Chairman of Peugeot, was formerly heading Tata Corus for a couple of years before he moved out in 2009.

Later news came that Mahindra & Mahindra was among the suitors for Aston Martin. The latest update is that the Indian automaker would be inclined to taking a 50 per cent stake in this British brand. Incidentally, M&M was also in the race to pick up Jaguar Land Rover five years ago which finally went to Tata Motors.

Observers believe that a lot of the recent action can be attributed to the crisis in Europe which has turned the spotlight to emerging markets.

For instance, auto component makers have been on an acquisition spree for some years now (even before Europe began sinking) and some of the big names include Bharat Forge, the Sona group, Varroc and Endurance.

From India’s side, Tata Motors and M&M have been the prime movers.

Both companies have come a long since 1991 when the country kicked off its reforms agenda paving the way for foreign investment in a host of sectors.

As big players entered the automobile arena, even the diehard optimists were not sure if home-grown companies would be able to withstand the onslaught.

It is to the credit of Tata Motors and M&M that they more than held their own. They were also quick to focus on their core competencies which spawned ‘Made-in-India’ products like the Indica and Scorpio.

The next big step was to scout for opportunities overseas.

In the case of Tata Motors, the first big step was the acquisition of Daewoo Commercial Vehicles in Korea.

M&M, meantime, was pursuing new global markets for its Scorpio.

Both companies also had had their share of failed alliances with foreign carmakers (Daimler and Ford) but came back strongly to forge new tie-ups with Fiat (for Tatas) and Renault (M&M).

Then came the tug-of-war for JLR, which the Tatas eventually snapped up from Ford for $2.5 billion in 2008. M&M followed suit with the acquisition of SsangYong Motor of Korea a couple of years later could now be close to an encore with Aston Martin.

murali.gopalan@thehindu.co.in

(This article was published on November 26, 2012)
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