Slym’s chance of getting it right for Tata Motors

Karl Slym was scheduled to take charge as Managing Director of Tata Motors today (October 1). He, however, chose to start work a fortnight earlier, a move which perhaps reflected the importance of the assignment.

Two key appointments were then announced. The first was of Ranjit Yadav, former country head of Samsung India, as President of the passenger vehicle business. The other was Neeraj Garg, ex-Director of Volkswagen with previous stints in Nissan and Honda, as Vice-President. Both will be an integral part of Slym’s leadership team, which now faces the challenge of putting the company’s passenger vehicle business back on the fast track.

It was barely some months ago when Group Chairman, Ratan Tata, told Tata Motors shareholders that it was a matter of great regret that the company had lost out to Mahindra & Mahindra in the passenger vehicle business. “I have great respect for what M&M has been able to do. I also have a certain degree of sadness and shame that we have let that happen,” he said at the annual general meeting.

Task cut out

The message was loud and clear: it was absolutely imperative for the company to pull out all the stops to ensure that its cars and utility-vehicles start clocking good numbers quickly. This is where Slym and his new team have their task cut out as they begin putting the revival script in place for the passenger vehicle business. It will include a plan to boost numbers for the Nano as well as get into more dynamic product planning.

The other interesting transition will happen when Ratan Tata steps down in end-December. paving the way for Cyrus Mistry to take over as the new group chairman. It will also mark the arrival of a new generation at the helm of Bombay House. Mistry is in his mid-40s and would fit in just perfectly with Slym and his team, who are pretty much in the same age group. This could unleash a fresh energy within the system and facilitate better teamwork.

“This is precisely what happened when Anand Mahindra took charge at M&M in the late-1990s and brought in greater informality within the hierarchy. The results began to show eventually,” an industry observer says.

JLR Powerhouse

It will, of course, take more than all this to put in place a cohesive plan for Tata Motors’ passenger vehicle business. The positive is that it already has a powerhouse in the form of Jaguar Land Rover, which is being ably steered by its CEO, Ralf Speth. Nobody would have thought this possible three years ago when JLR faced the brunt of the global slowdown and critics went to town saying Tata Motors was paying the price for this expensive acquisition. The turnaround story has been dramatic and the British brands are playing a big role in boosting the fortunes of the passenger vehicle business.

Can Slym, likewise, pull off something similar back home with the Nano and other new products from the Tata stable? His stint as CEO of General Motors India saw him weather one of the toughest crises, when the parent company declared bankruptcy in the US. Slym had to ensure constant connect with his company’s customers here. GM India was actually skating on thin ice and it required the alliance with China’s SAIC Motor Corp to pull it out of an abyss. Slym played a big role in this exercise which has paved the way for this formidable Chinese automobile manufacturer to enter India.

Different challenges

The challenges for Tata Motors are completely different. On the face of it, there was no reason for the Nano to fail, especially in a country where market penetration of cars continues to be less than 10 per thousand (people).

It was positioned as the people’s car but became more popular as the Rs 1-lakh option. At this price, it had the potential to do at least 20,000 units each month but has not managed to do even half this number.

In all fairness, the Nano suffered, thanks to its original plant location in Singur, West Bengal, which spawned fierce political protests and finally prompted Tata Motors to relocate the project to Gujarat. Valuable time was lost in the process and this affected the marketing plan, in which the real customer for the Nano was part of smaller cities and towns.

It is up to Slym and his new lieutenants to work out the comeback plan for the Nano. Industry observers believe it will not be easy going because the brand image of the car has been impacted since the time it was launched three years ago. The other theory doing the rounds is that customers do not want to be associated with a ‘cheap car’ and have therefore moved on to premium hatchbacks.

Logically, what will then do the trick is a more contemporary Nano, with a diesel engine, keeping in tune with market trends. With their backgrounds in branding and marketing, Yadav and Garg may just choose to reposition it as a ‘smart car’ and play down the price tag as the most important virtue.

There is absolutely no question that Tata Motors has a huge advantage in its cost-competitive manufacturing base, which only needs to be leveraged better to roll out products quickly. It is this strength that Fiat recognised and is keeping the manufacturing alliance intact even while going it alone in the marketing effort. Slym and his team will, therefore, focus on bringing more products sandwiched between the price points of the Nano and Indica. Fiat’s 1.3 litre Multijet diesel engine will ideally be an important part of this plan.

Industry experts believe that Tata Motors will now need to step on the gas with its product development plans even though the market is seeing a slowdown of sorts. The Nano was unlucky because of the problems at the Singur facility. It may have just clicked otherwise because there was a loyal customer base ready to get its hands on the car. After all, another compact product from Tata Motors’ commercial vehicle business caught the fancy of the market just a couple of years earlier. It continues to do well even today and goes by the name of Ace.

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