Former GM Exec Charts an Aggressive Course for Tata

MUMBAI – Tata CEO Karl Slym believes he has the tools to reverse the Indian auto maker’s sinking sales, market share and operating margins. He just has to learn how to use them.

“My first task is to identify profitable segments and to energize Tata’s product portfolio so as to increase all the three markers – sales, market share and profits,” Slym tells media at the mid-October launch of the new Manza small sedan.

Slym’s goal is to widen, modernize and improve the quality of Tata’s product portfolio so the auto maker eventually can challenge Maruti Suzuki for market leadership and remain ahead of Mahindra and Mahindra and Hyundai India.

It’s an ambitious undertaking for Slym, who spent the last five of his 17 years with General Motors as head of the auto maker’s Indian and Chinese operations. His leadership of Tata excludes its British Jaguar Land Rover subsidiary, a profit-maker that somewhat has offset its Indian parent’s losses.

Slym plans to use JLR’s design and engineering capabilities to strengthen Tata.  “We are not using our strengths for the market,” he says at the Manza launch.

Topping Slym’s agenda are replacing older and decreasingly popular models; adding features to and cutting costs of Tata vehicles to rival those of Maruti Suzuki’s; competing with fast-growing Mahindra on performance and price; and improving quality by learning from Toyota’s success in India.

All the same, Slym tells attendees at the opening of a dealership last month, "Customer-centricity is the hallmark of Tata Motors.“

Tata sales and profits have been uneven in part because of volatile currency markets; exchange losses from January 2011 through September totaled Rs3.1 billion ($59.6 million).

New-car sales last year dipped 1.2% but light trucks jumped 23.1% from like-2010, WardsAuto data shows. For the first nine months of 2012, car deliveries were off 18.5% while light trucks rose 13.5%, for a minuscule 1.1% gain over the 21-month period.

Slym nevertheless is encouraged by new entries such as the Manza, saying the entry-level sedan offers premium features yet is priced at only Rs640,000 ($12,300).

Sales of five Tata utility models rose by 16% through September, but demand for Maruti Suzuki’s Ertiga multipurpose vehicle at one point increased over 10 consecutive days. Mahindra had to double production of its XUV500 last year after receiving 8,000 orders for the new SUV in 10 days.

And although Tata’s market share fell from 21.2% in full-2011 to 17.4% through September, Maruti Suzuki’s share also has contracted because of labor troubles that cut 2011 production.

Mahindra and Hyundai, meanwhile, are gaining ground on the two market leaders. Mahindra car and light-truck sales through September climbed 5.9% and 25.6%, respectively, from a year earlier, WardsAuto data shows.

Hyundai car deliveries were up 6.6% year-on-year and rose 4.4% in 2011 over like-2010 following three straight years of double-digit growth. Tata outsells Hyundai locally, but the Korean auto maker also benefits from exports, which WardsAuto does not tabulate.

Slym indicates that as Tata focuses on improving quality and making better use of the resources the auto maker has at hand, sales and market-share growth will follow.