Tata Motors to overhaul range in India; eyes US for Nano

Tue Oct 16, 2012 10:52am EDT

* New MD faces sluggish Indian business, falling car sales

* Eyes U.S. launch if Nano in 3 years

* Nano underperforming, no new car model for 2 yrs

* Slym to focus on improving customer image of carmaker

By Henry Foy

MUMBAI, Oct 16 (Reuters) - Indian carmaker Tata Motors Ltd will look to ratonalise its product range and overhaul its image, the head of its domestic business said on Tuesday, as he sets about reviving the firm's sputtering local business in a fiercely competitive market.

Karl Slym also said the company would look to launch a next-generation version of its Nano, the world's cheapest car, for the U.S. market in about three years.

India's biggest carmaker by revenue is increasingly dependent on its UK premium car subsidiary Jaguar Land Rover for growth to offset weakness in India. Net profit at the domestic business has fallen for three straight quarters, and the company has not unveiled a new mass-market car for two years.

"We will continue to look for segments where there is growth, and there's a likely pruning that will happen over time as we do that with our portfolio," Slym told reporters at a company news conference on Tuesday.

"The foundations and the capabilities of an organisation that can do much better than what you've seen in the results are there," said Slym, who was appointed Tata Motors' managing director in August and took charge last month.

The 50-year-old Briton ran General Motors' Indian unit for four years before moving to China as executive vice president of the U.S. company's venture with SAIC Motor Corp and Wuling. He worked for just eight months in China before taking the job with Tata.

Tata's Indian car sales fell by 9.9 percent in the three months to June, its fiscal first quarter, the company said, despite a 5.2 percent increase in the size of the overall Indian market. Profits from the Indian business fell 31 percent in the year that ended in March and accounted for less than 10 percent of Tata Motors' consolidated profit of 135.17 billion rupees ($2.55 billion).

Tata, which is also India's biggest truck and bus maker, faces strong competition from global firms such as Ford and Volkswagen AG as they build up local operations.

"It's being able to provide the customer with the kind of experience that is now expected in the marketplace, that maybe his perception is he has not received in the past from Tata Motors," said Slym, who runs Tata Motors' Indian operations but not Jaguar Land Rover.

The Nano, hailed on its launch as the world's cheapest car, has not met early expectations. Tata has sold just 215,000 Nanos since its debut in July 2009, far fewer than the 20,000 a month initially targeted and has failed to convince millions of Indians that they should switch from their motorbikes to the car.

"We want it to be global and obviously the U.S. is a market that we would like to be in," Slym said.

Ratan Tata, chairman of the parent Tata Group, told the Automotive News that the Nano for the United States would have a bigger engine and more features, and sell for under $10,000.

In its home market, the Nano starts at around $2,685.

A pioneer in India's SUV market, Tata now trails local rival Mahindra & Mahindra, which sold around four times as many SUVs as Tata in the last fiscal year.

"We have a wide portfolio, and we have some cars in segments that are not necessarily growing how we would have expected," Slym told reporters. "For us as a high volume manufacturer it's important for us to have a variety of offerings in those key segments as we go forward." ($1=53.0275 Indian rupees) (Editing by Tony Munroe and Greg Mahlich)

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