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Old 23rd April 2014, 14:56   #1
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Default Tata Motors restructuring production strategy

Tata Motors has been seeing its sales decline over the past two years. As a result its factories have not been functioning at their full capacities. The company has decided to improve its margins and plant viability for which it has begun restructuring its production across its six factories. This will include shifting production between plants, shutting down assembly lines and adding products at factories previously dedicated to other models.

One of Tata Motors' plans is to roll out a new small car in 2015 to replace the decade-old Indica eV2. It will be based on the company's X0 platform and will be manufactured at the Sanand facility. This plant had been set up specifically for the Nano. However, Tata Motors could not sell the Nano in the numbers it had expected. As a result the Sanand plant rolls out 1,000-2,000 cars a month even though it has the capacity to produce 20,000. This step is expected to improve the plant's viability.

Tata Motors produces the Vista hatchback at the Tata-Fiat factory in Ranjangaon. However, the company’s new strategy will see the production of the upcoming Bolt, which is the Vista's replacement, take place at Tata's own plant at Pune. The Zest compact sedan is likely to be produced at Ranjangaon unit.

Coming to commercial vehicles, Tata Motors is shifting production of trucks from its Luncknow plant to its Pantnagar facility to avail of tax benefits. The Pantnagar plant was originally dedicated to the Ace LCV. Additionally, the company is continuing with block closures at its factories in Jamshedpur and Pantnagar to keep a control on inventory levels. Production cuts have seen a significant number of workers and executives lose their jobs.

Link to Team-BHP News Article

Source: Financial Express

Last edited by Aditya : 23rd April 2014 at 15:01.
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Old 23rd April 2014, 23:12   #2
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Default Re: Tata Motors restructuring production strategy

All these efforts wouldn't lead to efficient use of factories and cost savings if they don't have the sales!

I hope their upcoming products click; else, even shutting down factories would seem pointless.
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Old 23rd April 2014, 23:38   #3
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Default Re: Tata Motors restructuring production strategy

About time the much required move finally comes.

AFAIK the Sanand factory has a capacity extendable MUCH beyond 20k units per month. Since the land has been provided by Gujarat Govt at massively subsidised rates, it cannot be justified for TaMo to sit on it producing just 1.5k units/month - every Nano rolling out lends a heavy cost to the state exchequer.

I expect this Indica-replacement to be extremely competitively priced such that it'd do atleast 15K units per month. And maybe not just this car, even other New launches from TaMo would probably be made there and be competitively priced & well featured.

Resurrection of Brand TaMo begins.
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Old 24th April 2014, 16:42   #4
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Default Re: Tata Motors restructuring production strategy

Few points that comes to my mind that Tata motors management must keep in mind before they go in for a re-structuring of their facilities are

1. Improvement of the product qualities-They have to remember that they are not just manufacturing cars for drivers but also for families. An Indian family keeps their cars for ages before they finally give up on it. We have a 16 years young Maruti 800 in our family still up & running without any major glitches. The fit and finish, panel gaps, mechanical problems & failures has to be addressed immediately. Have a look at Tata Sumo. It seems like a mini Tata 407.

2. Reduction in the weight of their vehicles- Changing the overall weight of engine and body would definitely result in improved mileage and longer lasting engine. This would give them an edge in fuel efficiency and thereby will lead to higher sales volume.

3. Improvement in Service level-The service centre has to adopt a customer friendly approach rather than the drivers are the only customer approach. We have already had many experiences on this forum.

4. Change in Dealer approach- The dealers and their sales persons mostly behave very arrogantly. Most probably, they think that anyone who has walked into their showroom would be the driver of some tourist- taxi service company.

5. Target audience- Till date even the management of Tata motors concentrates on a segment that is mass mover. They should change it to family/person oriented audience.

With the above 5 points that i have mentioned, i believe that they will be able to do a major improvement in their passenger vehicle sales division. They should be able to get back the same position that they used to hold few years back which is now dominated by the Japanese brands.

Last edited by GTO : 25th April 2014 at 12:57. Reason: Typos
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Old 24th April 2014, 22:15   #5
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Default Re: Tata Motors restructuring production strategy

Good to know that TAMO is using this down time to shape up and get fit for the new product launches with the right approach. What makes me wonder though is that if these things are happening only now, when are the new launches expected to happen?

They need to launch the Zest & Bolt ASAP to take advantage of the reveals at the Auto Expo 2014, otherwise they'll stand to loose a lot of initiative to competition launching newer products in those segments.
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Old 26th April 2014, 22:21   #6
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Default Re: Tata Motors restructuring production strategy

I didn't get the logic of making the Bolt in Pune & Zest in Ranjangaon. The two are essentially the same cars with a lot of part sharing between them. it would be economical to have both being produced at the same factory wouldn't it?
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Old 27th April 2014, 00:11   #7
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Default Re: Tata Motors restructuring production strategy

Tata had a huge amount of goodwill and squandered it. A colleague bought an Indigo (one of the newer, supposedly better models) and had to sell it within two years. A friend tried to buy a Nano and couldn't because the sales people never got back despite taking a deposit (which was eventually returned, I think). The car needs to be reliable, easy to buy, easy to maintain. If Tata had ensured this 15 years ago they would be leaders today. They should have focused on quality and not price. It will be very hard to make back lost ground now. Being Tata, they still have goodwill, but much less than formerly.
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Old 27th April 2014, 13:24   #8
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Default Re: Tata Motors restructuring production strategy

Quote:
Originally Posted by amit View Post
I didn't get the logic of making the Bolt in Pune & Zest in Ranjangaon. The two are essentially the same cars with a lot of part sharing between them. it would be economical to have both being produced at the same factory wouldn't it?
Completely agree. For this reason I suspect this report is based on just a wild guess. Surely they need to restructure and so they will have to do it to keep each of their facilities utilized to its best. Ideally if the sales go up things fall into place but if some models aren't showing any signs of improvement then they need to restructure smartly. I believe the zest and bolt will come from the same plant. What TATA need is to maximise the NANO plant and it will have to be with new products so that there is an initial kick start.
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Old 28th April 2014, 11:56   #9
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Default Re: Tata Motors restructuring production strategy

What i believe is TaMo needs to put its pune plant as a best foot forward for a couple of reasons,firstly the skill and know how available in Pune (manpower) for manufacturing competitive cars is available quite easily compared to any other plant they have (although cost could be higher here as well).And also a lot of people who have migrated do like Pune a lot compared to other cities so attrition level could be low.

Secondly the facilities here and also vendor set up is decently good to ensure good quality for the bolt and zest as the Safari Storme is being produced here and i think its doing decently well both numbers as well as quality wise.

So personally i think its better to make use of the best you have rather than looking somewhere else just for cost effectiveness.

And i totally agree with Amit that the zest and bolt could be and should be produced at the same plant.
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Old 8th July 2014, 17:25   #10
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Default Re: Tata Motors restructuring production strategy

For the image tarnished Tata Motors, this article from Forbes should be like getting chilled water in the hell.. Makes me wonder if something is really happening out there or did Tata guys flexed their financial muscle and figure out some ways to reach the right newsmakers.. Anyways nice to hear good words about a Indian auto maker by Forbes.

http://www.forbes.com/sites/kenrapoz...jor-crossroad/

Few extracts below..

"For Investors, The Best Performing Auto Company In The World At Major Crossroad"

"Inside a hot testing center for large commercial vehicles, Tata Motors prepares for further modernization. There’s no going back for Tata now. This is becoming a world class auto maker. Investors are taking notice."

"The best performing auto company stock this year is probably a company American drivers have never heard of. But surely American portfolio managers with a global mandate know all about India’s Tata Motors."

"For investors, there is nothing better than Tata this year."
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