New Delhi: Putting Tata Motors Ltd back on track is not a task for the faint-hearted. The company that once attracted much attention for its small car Nano and its acquisition of Jaguar and Land Rover (JLR) is struggling. The Nano never picked up and JLR is facing headwinds due to a slowdown in China. Tata Motors has lost focus on its domestic car business and has become a a fringe player. Guenter Butschek, the 55-year-old veteran of automobile and aviation industries, has taken up the responsibility to revive the company. His track record at Daimler-Benz AG and Airbus SAS suggests, he could be the right man for the job.
In an interview, he spoke about company’s inner passion to improve, recasting and reinvigorating Tata Motors’ products, and aspiration of becoming a global company.
It’s been two months since you took charge at Tata Motors. What are the initial impressions that you get from your meetings with dealers, suppliers and staff?
Tata Motors is a company that takes great pride in its history and there is a general feeling in the people—the employees, dealers and suppliers—that Tata Motors should do well. This is a very unique strength to possess which backs you up during tough times and helps you come back stronger. There is an inner passion to improve, at the core of each individual associated with Tata Motors.
We need to take the positive energy within the company in the right direction to make sure there is engagement with purpose and I am confident this will result in new horizons for Tata Motors. Three key elements that we will be focusing on—highest product quality standards, expressive and exciting new design and technology innovations (for instance, fuel-efficient powertrains, best-in-class connectivity, etc.)—we can see all of these reflected in the Tiago.You must be aware that despite serious steps being taken, both at the engineering as well as the sales fronts, passenger vehicle sales of the company have not really picked up. According to you, what is ailing Tata Motors?
2015 has been a year which saw multiple new product launches from Tata Motors’ passenger vehicle business unit. There is a lot of positive buzz created on social media—thanks to our marketing campaigns and field activities. Quality levels and craftsmanship of our cars have improved and we are recalibrating our targets with reference to global benchmarks.
We did lose some of the momentum in the second half of the year, but we have a great product pipeline ahead, as seen in the response to our cars at the recent Auto Expo. What’s going to be the key is that we now take this robust product pipeline to the market and reposition our brand image in the minds of customers. Sometimes, it takes years to change the consumer perception about your brand and products. We have done the hard work in terms of reinvigorating and recasting Tata Motors’ products with closer eye on customer preferences. Now, we are getting ready to put the pedal to the metal to deliver to our commitments and expectations—and I would like to exceed those expectations.
What’s your outlook for commercial vehicle (CV) sales?
Tata Motors is the market leader in CV in terms of market share and revenue. We may have lost some market share in certain segments, but with our highly competitive and comprehensive product portfolio, wide sales and service network, segment-leading technologies, we are confident of bouncing back stronger. As the market leader, Tata Motors has regularly redefined the CV industry. We remain the only company to offer end-to-end people and cargo transport solutions matched with ever-improving products and service quality coming from a sharp customer focus. This holistic package is what differentiates us to make the market leader.
The last couple of years were among the most challenging for the commercial vehicles industry in India but we are beginning to see the cycle turn back. We have seen sustained M&HCV (medium and heavy commercial vehicles) growth in the last few quarters, majorly from replacement as well as new demand. The growth is primarily due to economic recovery, improving viability due to decline in diesel prices. We have already started seeing the return of growth in this segment, albeit on a low base. Though we are quite active in international market in CV, we still have more ground to cover.
Key government policy interventions, improvements in macroeconomic trends, especially speedy growth in infrastructural projects and a good overall consumer sentiment, will be necessary to see a real and comprehensive turnaround in the CV industry, especially in the SCV/LCV (small and light CV) segments that are yet to return to their true potential.
As compared with your previous assignments at Airbus and Daimler, Tata Motors remains a very small company (excluding Jaguar Land Rover). What prompted you to take up this job?
Tata Motors brings with itself a powerful association on shared values inherited by its people, the Tata group’s brand and its international presence. What stands out as very unique and compelling is the contribution of Tata Motors to India; in terms of enabling mobility in this country, transport solutions and overall industry development. Tata’s very strong commitment to its people and to the community, connects to my basic convictions that if you would like to make a difference to an organization, the difference is going to be made by its people.
So, I thought, I could bring my passion and experience to make a difference by taking the company to a completely different level. I am delighted to be part of Tata Motors and have serious faith in its capabilities for the future.
At the Geneva Motor Show, you told one of the editors that you plan to use your Airbus experience to ‘make Tata Motors fly’. Could you please explain learning, practices that you plan to bring to the table from Airbus?
With my past experience, I would like to bring the global exposure into Tata Motors’ systems, process redesign, product strategy, organizational transformation to strengthen the current operations. We will look to establish a global footprint and it is imperative we therefore evaluate ourselves with respect to global benchmarks on everything we do—from R&D, operations to sales and service customer experience. This would play a significant role in the holistic transformation to make the company future-ready.
Tata Motors expanded too soon too fast in certain markets such as Indonesia, South Africa, etc. How do you plan to rationalize the firm’s overseas operations?
We have a unique position with our brand portfolio, partner relationships, right sales and service support network, which we will leverage to provide the most capable high-end products to meet varying customer demands, across the globe. We will review our current footprint in terms of products, network, customer experience. This is a work in progress and we have not reached any conclusion yet. We have made some good start with our products in some of the Asean (Association of Southeast Asian Nations) and African countries and we will build upon this platform to develop a more holistic implementation plan.
Capacity utilization of the firm in the passenger vehicle (PV) segment stands at 33%. The Indian operation needs to find ways to utilize idle capacity in order to become profitable. In this context, what are your export plans?
Capacity utilization is a result of volume performance. Unfortunately, we have not been able to realize the true potential with our current PV portfolio. While the much-needed hype is created, sales numbers need to materialize now. Internally, we have implemented strategic actions such as producing different vehicle models on flexible manufacturing lines, which will improve utilization levels and lead to better operational efficiencies.
Additionally, we are exploring potential markets and latent demand that may exist for our products internationally. Global expansion will be a key aspect of our business strategy as that will de-risk our performance from the cyclic nature of domestic business.
There remains a big question mark on the future of Nano. Indian consumers and the government have started to demand stricter safety and emission norms. These norms are likely to make cars more expensive. In the backdrop of such developments, what is its future? Will these norms actually provide you more room to do different things with Nano in terms of shape and size?
The Nano was a visionary and ground-breaking decision that changed the passenger vehicle business in the Indian market. It set a different pace and created a new segment, and was the result of strong commitment by Tata Motors and Mr. Ratan Tata and his vision to mobility. The Nano is a testimony to our commitment to mobility solutions.
While sales have not been at par with our initial expectations, we are very much in line with the segmentation of the market. The Nano provides a solution for individual mobility even below the entry segment.
We are reviewing our product strategy and the Nano will play a critical role in the future.