Companies

Tata Motors’ CV revival plans may hit a wall

Nandana James Mumbai | Updated on March 20, 2021

Tata Motors’ unexpected announcement on Friday that Marc Llistosella will not be joining as the CEO of the company — contrary to the company’s previous announcement — could push back the company’s revival plans, especially in the commercial vehicle segment.

Llistosella was earlier the MD and CEO of Daimler India Commercial Vehicles Pvt Ltd. He was expected to help the company focus on getting its commercial vehicle business back on the growth path. Tatas announcement to appoint Llistosella was seen as a strategic move to put in place a revival strategy for Tata Motors.

“I think this is a significant setback as Tata Motors will now have to restart the search for a new CEO. Also, the fact that they made the announcement on February 12 and now, a month later, have announced that he will not be joining could only mean something has not quite gone per plan on the interim,” says Lloyd Mathias, Business Strategist and Investor.

Tata Motors did not say why Llistosella would not join. When BusinessLine reached out to the company to understand if and how the uncertainty due to this delay would impact the revival plan for CVs, Tata Motors did not have any further information to share.

Lack of clarity

But sources close to the company indicated that the move to appoint Llistosella may have been a hurried one. “It could be possible that Llisosella did not want to relocate to India. But this is something one would expect Tata Motors to have discussed with him before agreeing to appoint him,” said a source.

The appointment of a new CEO for a mega business, the announcement and the subsequent withdrawal is very strange, Mathias adds. “Also, it isn’t clear whether Llistosella wanted to be out or the company initiated it. The lack of clarity clearly implies there is something under the bonnet,” he says.

Anuj Kapoor, Assistant Professor of Marketing at IIM-Ahmedabad, points out that this is not the first time Tata has had a leadership vacuum. “It has managed without an MD for several years at a stretch. Tata will be able to get a leader with similar vision as Llistosella - hopefully in a few months,” he adds.

Analysts’ view

But analysts reckon that this delay and the uncertainties surrounding it will not impact the company’s revival plan for CVs in the long terms. “As a large entity, Tata Motors has strong leadership in place for its various business verticals, so the CV revival plan should not be impacted. Also, the present CEO will stay on for a while so I really don’t see much impact on this count,” says Mathias.

Tata Motors’ recent quarter was excellent and this turnaround was made possible by cost cuts and improved vehicle demand, while Tata relied on the luxury Jaguar Land Rover unit, Kapoor notes.

“The turnaround started in 2017 when Tata Motors announced its plan to focus on the ailing CV business. It is now trying to hive off the PV unit into a separate entity with a strategic long-term partner. For now, I don't see any specific damage happening due to the delay in the finalisation of a new name,” Kapoor explains.

Published on March 20, 2021

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