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Old 15th August 2013, 15:34   #1
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Default Independence Day Special: India (Tata Motors) builds a Truck

Hello Team!



We are all familiar with the formidable R&D capabilities of Tata Motors (“TM”). However, this capability did not result from any accident but was the outcome of a deliberate policy pursued by the Company’s visionary founders JRD Tata and Sumant Moolgaonkar. While TM’s contemporaries like Hindustan Motors (“HM”) and Premier Automobiles Ltd. (“PAL”) were content with reproducing their respective foreign collaborators’ models year after year without making any design change, TM made significant investments in training its engineers and in setting up an in-house R&D centre, first at Jamshedpur and then in Pune. As a result, TM was able to make significant changes and improvements in the foreign collaborator’s product that it was license manufacturing. So serious were TM’s R&D efforts that when the Company’s 15-year technical collaboration agreement with Daimler Benz came to an end in 1969, no need was felt to extend it further. The Company had acquired the ability to not only manufacture trucks locally but also to develop new products on its own, with only minimal foreign assistance in specialist areas. This aspect of Tata Motors clearly distinguishes it from other Indian auto manufacturers of its time. Today, it is heartening to see other Indian auto companies also undertake R&D activity. However, this was not the case in the 1960s, 70s and 80s. It would have shocked and surprised no one if TM had gone the way of HM and PAL. Luckily for India, it didn’t.

On this Independence Day, I’m happy to share with you an eye-opening article about Tata Motors’ collaboration with Daimler Benz. First published in the 1970s in “New Scientist”, a popular international science magazine, the article provides valuable insights into the process of technology transfer from Daimler Benz to Tata Motors that took place in the 1960s. The article was republished in 1980 in Tata Motors’ in-house publication “TELCO Dealers News” (Vol. 3 No.1 January 1980). Not accessible on the net, I’m reproducing it here.


About the author: Joseph Hanlon (born 1941) is a social scientist and Senior Lecturer in Development Policy and Practice at the Open University Milton Keynes, United Kingdom. Born in the USA, he moved to Britain in 1971. Hanlon has a bachelor's degree from MIT and a Ph.D. in high-energy physics from Tufts University. Before moving to Mozambique and specializing in the problems of developing countries, he was an editor of Computerworld and technology policy editor of New Scientist.

Happy Independence Day to you all!

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India builds a truck

TATA OK – This slogan painted on the back of thousands of trucks in India is the mark of one of the developing world’s most successful technology transfers

Joseph Hanlon

Everywhere you go in India, you see Tata trucks – invariably overloaded, often with people riding on top of the load and bouncing over rank bad roads. They survive terrible treatment and remain extremely popular. Today, Tata trucks are 98% Indian made, yet 25 years ago, Tata didn’t even make road vehicles.

Motor vehicle assembly is one of the first heavy industries that most Third World countries set up. Usually they just assemble kits sent from the partner in the developed country. Annual model changes are slavishly followed. Technology is never transferred; the junior partner never learns to design and build its own vehicles.

Tata Engineering and Locomotive Company (Telco) is an exception. Tata is one of India’s largest business houses and is better known for its steel works. Just before independence, it set up Telco and went into the railway business. In 1950, the Indian government ruled that foreign companies could not simply assemble vehicles in India, so most companies pulled out. In an attempt to plug the gap created, Tata, - with no road vehicle experience – looked for a European partner. In 1954 it signed a 15 year agreement with Daimler Benz (DB).

The agreement was typical of those signed by so many developing countries. DB provided the machinery in exchange for 18% of the equity of Telco.

Initially, five tonne lorry chassis were imported in semi-knocked-down condition – large pieces that were simply bolted together in India. Tata was permitted to manufacture as much of the truck as it could, but Daimler Benz was only committed to supply designs and technicians. Any design modification required DB approval.

What made this contract different was a virtual obsession on the part of Tata to control the technology. From the first, it set up a large apprentice training scheme so that it had the skilled people to learn the technology. At the peak of DB involvement, there were 300 German technicians at Tata – each with one to three Indian engineers assigned to him. In 17 years, Telco trained 2700 apprentices and more than 600 graduates, half of whom went on to work with other companies.

First Tata controlled and understood the assembly process. Then it went on to making some of the imported components. No forging and foundry capacity was available, so that had to be imported too. The forge came in 1958 and the foundry in 1961. Both came from European partners but this time it was outright cash sales. The contracts guaranteed that not only would the foreign partner install the equipment, but they would train Indian engineers – which Tata, because of its previous training schemes, had available.

By 1966, Telco had set up its own R&D facility in India.

Tata decided not to accept DB design changes. These tended to improve safety, comfort and speed which were fine for the European market but unsuitable for India. Instead, Tata decided to modify the original design to suit India. To deal with chronic overloading and poor roads, Tata strengthened the main frame, suspension, axles, brakes and gearbox. Other changes were made to take into account the chronic neglect and lack of regular maintenance. Finally, design changes were made to take account of less precise manufacturing standards by Indian sub-contractors.

Everyone at Tata stresses that DB was extremely cooperative. Indeed, by the end of the collaboration agreement in 1969, design changes were sent to DB simply as a matter of record. But the biggest design change was saved for and after the end of the agreement – a new engine with an extra 15 horsepower but 15% less fuel consumption.

Exports had been permitted to some extent by DB, but these jumped after 1969. The Telco truck proved much more suitable for other developing countries than the current DB truck that it was competing against.

By the mid sixties, it was clear that there was a market for a 10-tonne truck and Telco decided it could be locally designed. A new plant was to be set up in Pune and Telco brought in European machine tool making capability so that it was able to do all of the tooling for its own new plant. Only the larger engine was brought from DB. Tata paid ₤ 1 million for all drawings, patent rights, test data, etc. When the Pune plant is in full operation, Telco will be making 36,000 trucks per year. More than 98% of those trucks are Indian made. All that is imported are a few bits of electronics and some ball bearings. “You can hold the imported parts of a Tata truck on the palm of your hand,” one Tata manager told me.

Few developing countries have as large a truck market as India so that few could afford the R&D effort that Telco put in. And few countries have an engineering industry as well developed as India, which permits Telco to buy more than half its truck components from local subcontractors. Nevertheless, that basic lesson is there. If contracts are written to ensure that information is made available, if enough people are trained and then encouraged to dog their foreign counterparts to learn as much as they can, and if design and production changes are always made with local capabilities and local markets in mind, then technology can be transferred to developing countries.

But if managers simply wait for it to be handed them on a plate, dependence will remain the order of the day.

But even in India, this lesson has not been learned. As Monopolies and Restrictive Trade Practices Commission commented when it approved the Pune expansion in 1971: “Telco has been one of the few (companies) in the country which planned its own technological growth in such a way that it was ready to end its foreign collaboration agreement at the end of the initial period for which the agreement had been sanctioned.”



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Old 15th August 2013, 17:44   #2
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Nice article.
Having worked in the company, I met many of the pioneers and senior leaders who were team members in this journey. Though the R&D set up earlier consisted of really great minds, they were highly motivated people having the vision to make India self sufficient. Their aspirations and Tatas goals coincided making the best impact in research.

In the near-past, all I saw in the company was high dependence on foreign technology, huge involvement of foreign collaborators and preference to a foreign company. Yes, globalisation has brought many benefits for the customer but the ethos of having one of the best R&D in India has been lost.
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Old 15th August 2013, 18:28   #3
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Yes, globalisation has brought many benefits for the customer but the ethos of having one of the best R&D in India has been lost.
Rightly said, despite having branched out into pretty much the entire spectrum of automotive products over the last couple of decades, they havnt strengthened their R&D enough. ERC is now struggling to keep new products rolling out. A few good products though still trickle in, like the Prima truck range.
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Old 16th August 2013, 10:45   #4
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In 1972 I had worked for 2 months at Telco Pune as a summer trainees from IIT Kharagpur. The factory was not in full production. It was making aggregates (if that is the word), i.e. components like the rear axle tubing etc.

Some of the things I found amazing was :
- When I went to the welding shop I was given a welding machine and a cupboard full of welding electrodes. I was told to keep on welding until I could make a perfect bead 12 inches long. At IIT KGP we would never get more than 2 electrodes to do welding, and here was TELCO giving me, an outsider, all the electrodes I needed to use until I was perfect.
- TELCO was making transfer lines for its own use. These are long lines of machines along which a component travels. At each machine (station) one or more operations (drilling, milling etc) are carried out. TELCO was actually making these complex production equipment in-house, and not simply buying them from somewhere.
- The workers in the factory were all educated. I saw one worker reading a James Hadley Chase book during lunch.
- An engineering trainee was given the task of making a 50 cc 4 stroke engine all by himself, from design to production of parts to assembly, and he would pass only if the engine performed to specifications when run on a test-bed (dynamometer). At IIT we were only taught the theory of a 4 stroke engine, nothing of the design and certainly nothing whatsoever as to how to make the castings, forgings etc on our own.

In short, the culture of TELCO was so very different from all the other manufacturing companies, such as Hawkins Cookers (where I worked for a year after graduation) where the motto was : just produce the stuff - forget about doing any engineering or any changes in the design.
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Old 16th August 2013, 11:07   #5
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Originally Posted by benu9714 View Post
In 1972 I had worked for 2 months at Telco Pune as a summer trainees from IIT Kharagpur. The factory was not in full production. It was making aggregates (if that is the word), i.e. components like the rear axle tubing etc.

Some of the things I found amazing was :
- When I went to the welding shop I was given a welding machine and a cupboard full of welding electrodes. I was told to keep on welding until I could make a perfect bead 12 inches long. At IIT KGP we would never get more than 2 electrodes to do welding, and here was TELCO giving me, an outsider, all the electrodes I needed to use until I was perfect.
- TELCO was making transfer lines for its own use. These are long lines of machines along which a component travels. At each machine (station) one or more operations (drilling, milling etc) are carried out. TELCO was actually making these complex production equipment in-house, and not simply buying them from somewhere.
- The workers in the factory were all educated. I saw one worker reading a James Hadley Chase book during lunch.
- An engineering trainee was given the task of making a 50 cc 4 stroke engine all by himself, from design to production of parts to assembly, and he would pass only if the engine performed to specifications when run on a test-bed (dynamometer). At IIT we were only taught the theory of a 4 stroke engine, nothing of the design and certainly nothing whatsoever as to how to make the castings, forgings etc on our own.

In short, the culture of TELCO was so very different from all the other manufacturing companies, such as Hawkins Cookers (where I worked for a year after graduation) where the motto was : just produce the stuff - forget about doing any engineering or any changes in the design.
As a person who had a similar experience of IIT & Tata Motors, about three and half decades after you, I can say that neither has changed much.

During the couple of months of internship, all the interns were encouraged to play around, to learn and to question everything that we saw. The interns ended up costing the company a loss of a few lakh rupees.

Unfortunately, both the institutions seem to have fallen a bit behind on the progress curve. Hope in the near future, things improve for the better.
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Old 16th August 2013, 17:42   #6
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Originally Posted by turbospooler View Post
Having worked in the company, I met many of the pioneers and senior leaders who were team members in this journey.
Lucky you!

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Originally Posted by turbospooler View Post
Though the R&D set up earlier consisted of really great minds, they were highly motivated people having the vision to make India self sufficient. Their aspirations and Tatas goals coincided making the best impact in research.
I would like to add here that Govt. policies also had a role to play here. There was a heavy emphasis on: (a) self-reliance and (b) conservation of foreign exchange. Import of technology was discouraged since it involved paying the foreign collaborator dividend, royalty and trademark fees in hard currency. In spite of being fairly self-reliant, even Tata Motors had sought fresh foreign collaborations when it wanted to enter the LCV and car segments. On both the occasions, Govt of India denied permission.

For the LCV project, TM was told "We have already given licenses to 4 companies to import LCV technology from Japan. It will involve considerable outflow of foreign exchange and so we can't give permission to yet another manufacturer." Tata then decided to go on its own, launched the "Project Jupiter" and created the 407 from scratch in a record 18 months!

For the car project too, Tata originally wanted to make 40,000 Honda Accords annually. It had even given an undertaking to export 50% of the production. Yet, the Rajiv Gandhi govt. declined permission. Those were the license-permit raj days!

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Originally Posted by turbospooler View Post
In the near-past, all I saw in the company was high dependence on foreign technology, huge involvement of foreign collaborators and preference to a foreign company. Yes, globalisation has brought many benefits for the customer but the ethos of having one of the best R&D in India has been lost.
Very well said! In the olden days even items like driver seat and wiper motor was being designed in-house by Tata. Now there is a tendency to outsource design work.

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Originally Posted by benu9714 View Post
In 1972 I had worked for 2 months at Telco Pune as a summer trainees from IIT Kharagpur.
Had work started on the 1516 project when you were there?

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Originally Posted by benu9714 View Post
The factory was not in full production. It was making aggregates (if that is the word), i.e. components like the rear axle tubing etc.
That time, the Pune factory was still in the process of being set up. Production there really started in 1977.

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Originally Posted by benu9714 View Post
Some of the things I found amazing was :
- When I went to the welding shop I was given a welding machine and a cupboard full of welding electrodes. I was told to keep on welding until I could make a perfect bead 12 inches long. At IIT KGP we would never get more than 2 electrodes to do welding, and here was TELCO giving me, an outsider, all the electrodes I needed to use until I was perfect.
- TELCO was making transfer lines for its own use. These are long lines of machines along which a component travels. At each machine (station) one or more operations (drilling, milling etc) are carried out. TELCO was actually making these complex production equipment in-house, and not simply buying them from somewhere.
- The workers in the factory were all educated. I saw one worker reading a James Hadley Chase book during lunch.
- An engineering trainee was given the task of making a 50 cc 4 stroke engine all by himself, from design to production of parts to assembly, and he would pass only if the engine performed to specifications when run on a test-bed (dynamometer). At IIT we were only taught the theory of a 4 stroke engine, nothing of the design and certainly nothing whatsoever as to how to make the castings, forgings etc on our own.

In short, the culture of TELCO was so very different from all the other manufacturing companies, such as Hawkins Cookers (where I worked for a year after graduation) where the motto was : just produce the stuff - forget about doing any engineering or any changes in the design.
Feels really good to hear that about an Indian company!

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Originally Posted by julupani View Post
As a person who had a similar experience of IIT & Tata Motors, about three and half decades after you, I can say that neither has changed much.

During the couple of months of internship, all the interns were encouraged to play around, to learn and to question everything that we saw. The interns ended up costing the company a loss of a few lakh rupees.
Nice to hear that!

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Originally Posted by julupani View Post
Unfortunately, both the institutions seem to have fallen a bit behind on the progress curve. Hope in the near future, things improve for the better.
Let's hope things improve.

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Old 16th August 2013, 22:10   #7
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Thanks for sharing the article! The world recognizes them as 'lorries' and have lots of fond memories.

A great company having wonderful resources is a pleasure to work for! I hope the current business scenario makes a positive rebound with quality driven products coming out from TELCO.
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Old 19th August 2013, 13:40   #8
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Even in our MBA, one core subject we studied was Management of Technology and Innovation for Competetive Advantage. The subject taught us now, in 2012-13, what Tata did during that time and how it is important for all developing countries to gain as much technological self reliance as possible.

This is a very good book which was our main text for how technology management is important and how ToT etc is and shouldbe done.
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Old 19th August 2013, 21:32   #9
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Nice thread OP and some good comments there too. Having worked at the ERC in Poona, I think there are several things that need improving. When I joined I thought I'd stay for a long time since this was probably the best company I could work for in the automotive sector after graduation. However, things changed over the period of 2 years that I went from a GET to full-time engineer.

(a) There is huge shortage of quality engineers. And let me not confuse this with quantity, because India seems to churn these out like an assembly line. But while there were some intelligent and dedicated people, they were stymied at every opportunity to do something innovative or path-breaking just because counterparts couldn't fathom doing it in an untested way.
(b) Middle management sucks at TML. There is a huge core of people that are plain incompetent or otherwise good engineers and horrid managers. They have literally sat there and done nothing after the Gen 1 Indica was rolled out. If V Sumantran hadn't come in and started the 3 big projects (Indica 2nd gen, Nano & Safari), they'd have been still selling the first gen people's car after 20 years. After he left, there's been really nothing new in the pipeline. Managers need to be car people who have a passion for engineering rather than politics.
(c) The politics. Ofcourse this is something experienced at every company in the world and least of all at Tatas where people are very good at heart and values in general. But incompetency breeds defensiveness and complacency in those who're just not qualified to lead teams or pursue big projects. There is a whole line dividing the local ghaatis from the TamBrams (forget the minority who are neither) everywhere within groups to the cafeteria in the ERC and the politics ladder is pretty much aligned along two sides of that line. This needs to change. You can't have one group undermining good managers simply because he may belong in the other group by birth/race.
(d) Cost-cutting and shady supplier management have worked to reduce quality and increase warranty costs, leading to fire-fighting mode in the ERC more than R&D. If engineers are focused on continuous improvement of current product to the disadvantage of working on pipeline projects then no lessons learned will be transferred to the next generation of product. As an example - a component developed by engineers that would not only have cut packaging space in the engine bay, but also provided greater power and reduced warranties was shot down by the baniya mentality that couldn't accept a ₹15 increase in cost of sourcing. Needless to say they were spending ₹4000 per car on warranties in an international market soon after.
(e) Reliance on consultants. While McKinsey are the favourite (by far) for the Tata Group, the company spent millions on them for some fancy power-point slides that helped in no way and only caused heartburn between departments. Consultants shouldn't be folks who know nothing about the auto industry, but are there only because they have MBA degrees. Those degrees are just as bad as Indian engineering degrees if they're not solving the problems. I saw the same presentations (called 'solutions') given to 3 different departments - ERC, TS & PCBU - for three completely different project problems. And ofcourse these guys only give you the paperbacks without implementation. So they were useless because managers felt they were a collection of statistics and opinion polls (which they'd been interviewed for), but not a green light to actually do what they'd all felt necessary in those interviews. There was no order to do anything based on those fancy recommendations.
(f) Finally, there needs to be a car guy heading the company. RT was great because he had a passion for the company (his favourite) but a lack of manufacturing specialists or automotive specialists is hampering the company right now. We can't rely on marketing alone to get us sales numbers - we're going to need product!
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Old 21st August 2013, 18:38   #10
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Sorry for a
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.......
(a) There is huge shortage of quality engineers.
......
I largely agree with most of what you have said. On the above point I would say, that there is the possibility of hiring good engineers in India. The IITs and NITs do churn out pretty good engineers, many of whom are passionate about automobiles.

But Tata Motors is just not able to retain any of them for a long enough period of time. And this is not just because of pure salary reasons either. The various problems that you outlined frustrate many of the people who join. I can tell you of the 40odd people who had joined along with me a few years back less than 25% is now still with them.
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Old 22nd August 2013, 05:43   #11
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Sorry for a


I largely agree with most of what you have said. On the above point I would say, that there is the possibility of hiring good engineers in India. The IITs and NITs do churn out pretty good engineers, many of whom are passionate about automobiles.

But Tata Motors is just not able to retain any of them for a long enough period of time. And this is not just because of pure salary reasons either. The various problems that you outlined frustrate many of the people who join. I can tell you of the 40odd people who had joined along with me a few years back less than 25% is now still with them.
You're right - I should've clarified that not all engineers were bad - just some and the rest frustrated.
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Old 22nd August 2013, 13:58   #12
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Designing, manufacturing and testing your own engine!!! Cannot even imagine a fresh graduate being given a welding machine in present day, leave alone designing an engine. Those were really the golden days of engineering in India.

As mentioned by Activ8 - if this is the situation in the top most indigenous manufacturer in the country, imagine the plight of people like me who joined smaller companies. All we got in the name of induction was hours and hours of talks by veterans and some managerial training programmes. We get fancy designations thanks to our fancy degrees and we get lost in a complex web of MS excel, powerpoint and outlook in the name of work.

Thanks to my department of choice which is vehicle testing, I get the chance to get my hands dirty on a daily basis. The rest of the guys who joined with me have more or less been stuck to the computer screen. I understand that the auto industry today is very different compared to the 1970s but the engineering basics will always remain the same and that what is being sorely missed by engineers like me today.

In all the complex activities that are involved in the automotive design process today, we only get a very small piece of the action and most of the time it is reserved to virtual work such CAD or CAE. The only way us engineers get to experience a complete vehicle engineering exercise today is through student competitions such as BAJA/ FSAE which luckily I got to be a part of. Probably the reason why I currently feel that I have learnt a lot more in those 6 months than I have in the past one year in the company.

It is very easy to lose the drive to really do something worthwhile as in something that a bhpian would expect from their vehicle. You would be surprised to find the number of people who have simply stumbled into the industry and consider an automobile to be just another machine, that too in R&D. Not to insult any one but the best example is our own bhpian going to work for an altogether different industry after his two months at TATA. I am sure he might have had his own obligations but I just cant stop thinking about how much value he would have added, had he been there. This more or less holds good even to this day.

I dream of the day when auto enthisiasts find a way to force themselves into the industry, be it in managerial, technical, sales, marketing or even simply the average service centers. It makes a huge to difference in any activity when you look at it from a petrolhead's perspective.

With the way that Tbhp has influenced buying decisions with unbiased reviews and opinions has made the whole industry situp and take notice of this motley crowd. I sincerely wish that the day is not far away when recruiting decisions are swung towards hiring more enthusiast crowd and young graduates proudly mention on their resumes that they are a part of teambhp(I do that).
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Old 22nd August 2013, 15:53   #13
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.
(f) Finally, there needs to be a car guy heading the company. RT was great because he had a passion for the company (his favourite) but a lack of manufacturing specialists or automotive specialists is hampering the company right now. We can't rely on marketing alone to get us sales numbers - we're going to need product!

Can't agree more! Working in a similar automobile company myself! Anyways, the automotive world and the world in general is an average place - and too much passion can also be dangerous. Imagine the companies that you would associate with as having maximum passion and passionate car people - Lamborghini (styling with mad performance), Citroen (eccenticity / avant garde engineering), Lotus (light weight engg / performance), Aston Martin(styling / ultra premium-ness)...almost all been to the brink of bankruptcy and have had multiple owners! Compare that with the Toyotas or Hyundais of the world - the so called dominant automobile companies, they do the same boring stuff day in and out, be it styling or engineering, these vehicles mostly lack soul, but they will definitely tick off most boxes on the "McKinsey list"!
It is very rare to see an automotive equivalent of Apple where Steve Job's passion and business acumen could further the field and make huge profits at the same time. The closest auto company would be a Ferrari or BMW! So like always, "balance" - that's the word! After all, how many Bob Lutz can we find? Probably the best car managers now - Allan Mulally and Carlos Ghosn (remember him almost throwing up after a GTR - ride?) aren't car guys, but they are hard-nosed number crunching go-getters with good decision making skills. TATA needs them, and needs them fast, and so do a few other Indian companies. Strangely enough, all that TATA needs to do is to look at what JLR is doing right, and its doing it right under TATA's nose!

Disclaimer: Despite not being a car guy, Carlos Ghosn was the champion of the GTR development. He just knows to smell a good investment! And of course, behind every Mulally & Ghosn, there are multitudes of car guys waiting for the "GO!" order.
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Old 22nd August 2013, 16:58   #14
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On the same note, I highly recommend the BBC video - "Das Auto: the Germans, their cars and us", a brilliant take on the state of the present British car industry. Its a stark contrast to the last 10 minutes of the last episode of Top Gear season 20.
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Old 22nd August 2013, 19:25   #15
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Good to read the article about tata motors and how they managed to be one of the leading commercial vehicle manufacturer world over. It is bit surprising that tata motors have never been able to achieve similar success in passanger car segment. Is it because of higher focus on commercial vehicles or high competition or something else? When tata motors can manufacture good trucks and provide after sales service why similar rigour is missing in passenger car segment.
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