TATA'S new driving force

When Carl-Peter Forster, a veteran in the European car industry, was appointed CEO of India's Tata Motors Group in February 2010, the business press was the first to shake their heads. "Why is Forster always looking for the toughest jobs in the industry," sniffed the influential German business magazine Manager Magazin.

Forster already had a few "missions impossible" behind him by then. In 2001, he became chairman of the ailing German brand Opel, and in 2004 took up the position of president of General Motors Europe, adding the debt-ridden GM brand Saab to his portfolio.

After GM's bankruptcy and rebirth he split with his employer on different viewpoints of the sale of Opel and quit all positions with GM globally. It was nevertheless a surprise when it was announced that he had taken overall responsibility for the biggest Indian carmaker, including the recently acquired Jaguar and Land Rover brands globally. "I rather look for the most thrilling jobs [than the toughest]", he told Manager Magazin.

Born to a German diplomat in London in 1954, he is the first European manager ever to take over a key industry function in a traditional Indian family-based business conglomerate. The move came after Tata Motors has been on an international buying spree for several years as it seeks to globalise its business. Purchases include the Daewoo Commercial Vehicles Company in 2004, South Korea's second-largest truck maker, which was rebranded to Tata Daewoo, today accounting for two thirds of heavy commercial vehicle exports out of South Korea.

In 2005 Tata Motors bought a 21 per cent stake in Spanish bus manufacturer Hispano Carrocera, and in 2006, the Indian company established a joint venture with Marcopolo, the Brazilian builder of buses and coaches. It also formed a joint venture with Fiat in 2007 to gain access to the Italian company's diesel technology.

"Tata Motors expects that Mr Forster's induction will greatly facilitate its ambition towards being a truly international company," Ratan N. Tata, Chairman of Tata Motors, said on occasion of Forster's appointment.

However, though Tata currently has dealerships in 26 countries, its customer base is mainly concentrated on the Indian subcontinent. According to the June sales figures, Tata Motors sold 264,488 vehicles globally (including domestic) from January to June 2011, of which 11,343 were Jaguars and 50,747 were Land Rovers manufactured in the UK. The export ratio from India is, however, very low: only 3 per cent of passenger cars and 7 per cent of trucks are sold abroad, which makes the Tata brand practically non-existent on the international market.

Forster's biggest challenge is without doubt the reduction of the stark contrasts within the Tata Motors product range. The company produces — besides trucks, buses and military vehicles — a line-up of cars that range from the super-cheap Tata Nano with a price tag of $3,000 (about Dh11,000), to the $100,000+ Jaguar and Land Rover product range.

While the Nano has caused global attention for Tata Motors, the introduction of the car was accompanied by a couple of glitches, and the original price soon turned out to be unrealistic, which is one of the core problems Forster will have to solve.

The gap between low-tech products such as the Nano and the luxury line-up is the next big challenge. While Jaguar and Land Rover cars are still manufactured in the UK, Forster is starting attempts to capitalise on lower assembling costs in India, as many in the industry expected. On May 27, 2011, Jaguar Land Rover's first assembly plant opened in India in Pune.

"This marks a significant step in our growth strategy for the Indian market. The opening of this plant demonstrates close cooperation between the parent company Tata Motors and Jaguar Land Rover and we are keen to develop this further," Forster said at the opening. The factory will assemble the Land Rover Freelander for the Indian market, where the first Jaguar and Land Rover showroom was opened in 2009.

So far Jaguar Land Rover has pulled in money for Tata (mostly from wealthy Chinese and Russian customers), but this comes at a price. Forster said at a recent industry event that Tata Motors has budgeted five billion pounds in capital expenditure for Jaguar and Land Rover over the next few years to broaden its position as a global luxury brand.

He also said that he is going to "put together a package" of Tata passenger cars and trucks for all the international markets where the company wants to strengthen its foothold, at first in countries which have similar market conditions to India. But there are plans to expand in Asia, Africa, Eastern Europe, Latin America and even Western Europe.

Last month, Tata Motors' joint venture with Tata Africa Holdings opened its new assembly plant in South Africa at Rosslyn, north of Pretoria, with an investment of $16 million.

When contacted by GN Focus, Tata Motors spokesman Debasis Ray did not engage in a further discussion. The S.P. Jain Institute of Management and Research based in Mumbai wrote in a recent analysis on Tata Motors: "if proven compatible, the two revenue streams of the luxury group and the Nano could mitigate each other's risks. However, the decision to compete in both the high-end luxury and low-end economy markets certainly creates a big and audacious task ahead for Tata Motors."

Forster's contract has an initial duration of three years, but is not limited to it. It would indeed be a period too short to achieve the results envisaged by Ratan Tata, who is known to think in longer periods of at least five- to eight-year plans.

Tata Motors

Tata Motors is India's biggest manufacturer of cars, buses and trucks and part of the Tata Group industrial conglomerate, which engages in a diverse range of activities such as finance, steel, information technology, communications, energy, consumer products, chemicals and hotels.

Tata Motors achieved revenues of $27.46 billion and a net income of $2.07 billion in fiscal year 2010/11. The company started in 1945 producing locomotives and launched its first commercial vehicle in 1954 in a technical collaboration with Daimler-Benz.

Today, it is the world's fourth largest truck manufacturer, the world's second largest bus manufacturer, and employs 50,000 workers. Its brands are Tata, Tata Daewoo, Hispano Carrocera, Tata Marcopolo, Jaguar and Land Rover.