The largest vehicle maker of India Tata Motors Ltd is reportedly in consultation with Chinese automobile companies for an agreement for the expansion of passenger vehicles business in India. The sources confirm that possible collaboration with Chinese automobile companies could include technology development for electric mobility, manufacturing capacities, and development of engines and platforms along with other aspects of the business.
The vehicle makers’ possible pact with Chinese automobile could help Tata Motors in reducing the debt of India’s unit which is close to Rs. 23,365.49 crore. The total amount of debt on Tata Motors which includes UK unit of Jaguar Land Rover comes to approx Rs. 95,465.08 crore.
The Chinese automobile companies may either invest directly in Tata Motors or form a joint venture.
As new norms for safety standards have been introduced and the other norms of emission are in pipeline which includes stricter phase of corporate average fuel efficiency (CAFE) and real-time driving emission test in a couple of years, Tata Motors is actively seeking partnership to invest in futuristic technologies to cope with stringent emission, fuel efficiency and safety standards.
Finding it hard to maintain an edge in both the commercial and passenger vehicles could be another reason for Tata Motors to seek collaboration from China. In passenger vehicles, the company’s market share in November shrank to 4.59% from 6.19% a year ago, registering a 39% drop in sales to 86,412 units.
Anticipating the competition ahead in the market with new players like Kia Motors and MG Motor, the company has given nod for the possible collaboration. The competition in the market in future is going to be tough. India’s third-largest vehicle maker Mahindra and Mahindra has also formed a joint venture to develop and manufacture combustion engine and electric vehicles with the Indian unit of US carmaker Ford Motor Co.
Toyota Motor Corp. and Suzuki Motor Corp. of Japan also announced to work jointly to develop electric vehicles, lithium-ion batteries and combustion engine vehicles for the Indian market in 2017. These are such stakes of the market that has led Tata Motors to have consolidation with the Chinese company.
On other hand, as the trade war has temporarily come to an end between US and China, the Chinese motor giants are eager to establish in Indian market. As Tata Motors has excess capacity to be utilized in expanding the operations, Chinese companies could easily collaborate to set up the unit here in India.