TATA Motors to hive off Distribution

[Car-Agey]

MUMBAI/BANGALORE: In a trend setting move, Tata Motors, India’s largest automobile firm is hiving off its sales and distribution operations into a separate entity, as part of a restructuring exercise. The development comes at a time when the company is readying to launch the worlds ultra cheap Nano.

The new entity, TML Distribution Company, a wholly owned subsidiary of Tata Motors, will now take on the operations of sales, logistics and distribution of both commercial vehicles and passenger vehicles to its 200 odd dealers across the country.

Tata Motors is transferring approximately 100 people to TDCL, which is expected to start operations shortly. A source said that many factors have led Tata Motors to realign its business structure. It is looking to curtail its costs and one way to do that is through tierisation. Logistics requires specialized skills and greater attention; a separate entity also helps in unlocking value in the future. TDCL has been formed with a capital of Rs 25 crore.

When contacted a Tata Motors spokesperson said, Tata Motors' product portfolio, which already includes large volume vehicles, is being further expanded. Simultaneously new plants are being set up at Pant Nagar, Singur, and Dharwad, while capacities are being added at Pune, Jamshedpur and Lucknow.

The dealership network itself is being expanded. In line with the growth, breadth and reach required for the product portfolio and multi-locational operations, it is necessary to bring focus and greater efficiency in the selling and distribution operations and processes.

It is speculated that new entity has the potential to become as big an entity like Tata Motors, considering TDCL will procure vehicles from Tata Motors and the sale will be reflected on books of TDCL.

It (new set up) will help improve planning,inventory management, transport management, on-time delivery, while harnessing cost synergies. Tata Motors and subsidiary will work together for sales plans, with the subsidiary procuring vehicles and selling them to dealers as per their orders, the spokesperson added.



Source : Tata Motors to hive off distribution-India Business-Business-The Times of India

[Car-Agey]

Well friends, what do you think will be the effect of this move by TATA Motors. Will the new entity focus on the biggest weakness of the TML dealerships namely A.S.S. Can we expect improvement in this area.

With so many new launches expected from TATA and FIAT stable, I hope TDCL has its priorities right and focuses on the A.S.S. part.

[sridhga]

I had a problem with the dealer and I made a call to Tata Motors office in Mumbai. My transaction was smooth thereafter. I do not know if this separation of distribution business is going to make it more customer focused or will the parent company lose the customer touch? Only time will tell. Amen!

[1100D]

Wonder how the product planning will fit in this new distribution.

[theMAG]

This will be more to do with internal manageability rather than any end-user considerations.

[vipul_singh]

Totally agree that this is unlikely to have end customer benefits, since this has to do with distribution (logistics) rather than sales and service.

[greenhorn]

I hope this doesn't make the dealers behave even more irresponsibly :(