3 min read.Updated: 22 Aug 2014, 05:00 PM ISTAmrit Raj
Cars to be positioned as premium vehicles with a Rs16-25 lakh price range in India; expected to be introduced in 2017
New Delhi:Tata Motors Ltd’s board has approved a proposal to develop two sports utility vehicles (SUVs) with assistance from its UK luxury car making unit Jaguar and Land Rover (JLR) as the Indian company looks to position them as global products, according to two people familiar with the development who spoke on condition of anonymity.
The two vehicles are expected to be introduced in 2017 and will be positioned as premium cars with a price range of ₹ 16-25 lakh in India. Code-named Q501, a five-seater SUV, and Q502, a seven-seater SUV, the two vehicles will both have performance and handling support coming in from JLR.
“This is part of a long product pipeline till 2020, an approval for which has been received from the Tata board," an executive at a leading auto parts maker said on condition of anonymity.
This is a result of both Tata and JLR exploring synergies for sharing platforms, but the project was not viable for a long time because of the cost and positioning problems. “Now they have managed to crack it," this person said.
Tata and Land Rover are exploring possibilities to develop SUVs and JLR support will come in the areas of architecture, performance, technologies and better body stiffness fronts, Mint first reported on on 25 September. Another Tata group firm will help the company in areas of information technology (IT) programming and analytics.
Tata Motors is keen to establish itself as a global manufacturer of passenger vehicles, but quality-related issues in its products have dented the company’s plans to enter some of the big markets. Its Nano car, billed as the world’s cheapest car, failed to live up to the company’s expectations.
A Tata Motors spokeswoman declined to comment on the board approval. A questionnaire sent to the JLR corporate communication team on Tuesday remained unanswered.
The Tata group’s previous chairman Ratan Tata told shareholders in Tata Motor’s 2010-11 annual report that while JLR and Tata Motors are looking “to optimize the synergetic strengths between JLR and Tata Motors in India, an examination is also underway on joint engine development programme which would have manufacturing facilities both in the UK and India".
Tata plans to sell 80,000 units of these products globally in regions such as South-East Asia and Gulf Cooperation Council countries, the second person familiar with the development said.
To be sure, Tata’s recent launches in the SUV segment have proven to be duds for reasons such as high pricing and bad positioning of the products.
The Aria was launched in 2010 as India’s first crossover between a sedan and an SUV, but it failed to boost Tata’s sales as it was seen as too expensive at ₹ 13.18 lakh in Mumbai. A stripped-down version of the vehicle was introduced in 2012 for ₹ 9.95 lakh.
In the year ended 31 March, 376 units of the Aria were sold against 923 sold in the year-ago period. Passenger vehicle sales of Tata Motors declined 22% to 128,000 units during the period.
Tata Motors is “keen about building its utility vehicle portfolio as it thinks that is its DNA", said a Mumbai-based consultant who did not want to be named. “To claw back its share in the segment will be a daunting task. They have been on the job very seriously and they know what are their problem areas."
Tata Motors was the first company to sell SUVs in India with the Estate and the Sierra models, followed by the Safari and the Sumo. However, it lost out to Mahindra, which introduced successful products such as the Bolero, the Scorpio, the Xylo and the XUV5OO.