Tata Motors to focus on CV biz under new CEO
The appointment of Llistosella indicates that Tata Sons, the parent of Tata Motors, will focus on the commercial vehicle segment to drive the profitability of its India operations.
Tata Motors’ new chief executive and managing director Marc Llistosella will take over the company’s India business at a time that its commercial vehicle sales have been hit hard by the economic slowdown that has come as a fallout of the covid-19 pandemic and the management is scouting for a strategic investor for its passenger vehicle business unit. The Mumbai-based company has also embarked on a stringent cost-cutting programme to turn profitable in the next few years and reduce debt.
The appointment of Llistosella indicates that Tata Sons, the parent of Tata Motors, will focus on the commercial vehicle segment to drive the profitability of its India operations. It also shows the conglomerate’s aspirations to improve its presence in the export markets, especially in Asia and Africa, to reduce dependence on the domestic market as demand for commercial vehicles tends to be cyclical in India.
Llistosella’s experience in India, as the head of Daimler India Commercial Vehicles Ltd, will help Tata Motors increase its volumes in the premium trucks and bus segments, something that has been eluding the company for the past few years. His experience of having worked at one of the world’s largest commercial vehicle manufacturing firms will also help guide Tata Motors’ investments in electric buses and light commercial vehicles, in view of the government encouraging automakers to develop more electric vehicles to reduce vehicular emission.
Tata Motors needed someone with relevant experience to spearhead its India business in the post-pandemic era and Llistosella fits this role with his vast experience in markets across Asia, according to a senior industry executive. “It is very apparent that the appointment has been made with an eye on the commercial vehicle business, a segment where Tata Motors is the leader. Through this appointment, the management is also making another attempt to expand its presence in other emerging markets. The commercial vehicle business forms the lion’s share of the India business’ bottomline,” he said requesting anonymity.
The passenger vehicle business will chart its own course, with the launch of the new subsidiary and the possible entry of a strategic investor, though majority control will still be with Tata Motors, the executive said.
Heavy and medium duty truck sales of Tata Motors have been declining since 2019 because of the economic slowdown, revised load carrying norms and transition to Bharat Stage VI emission norms. Sales of light commercial vehicles also dipped during the period. The covid-19 pandemic exacerbated the crisis and sales nosedived to record lows. Sales of commercial vehicles have, however, started to recover gradually from the December quarter, in line with the improvement in overall economic activity.
Commercial vehicle sales of Tata Motors fell by 34% to 340,700 units in FY20 and sales dipped further by 41.3% to 142,292 units in the April to December period of FY21.
