Tata Motors Ltd., the owner of Jaguar Land Rover (JLR), want to hive off its car business from vans, trucks, and buses, and find new partners to meet the burgeoning demand for electric cars. It hopes to stave off the expected downturn in demand from the coronavirus outbreak too. “The recent outbreak of COVID-19 virus increases the challenges faced by the business,” Tata Motors said in a statement Friday. “This decision is a first step in our plans to secure mutually beneficial strategic alliances for the domestic PV business and help secure its long-term viability.” Tata Motor’s manufacturing units in Pune, Maharashtra, and the Jaguar Land Rover (JLR) UK plant have been closed temporarily due to the lockdowns announced to combat the coronavirus pandemic.
The Tata board has approved the transfer of relevant assets, IPs, and employees to the passenger vehicle business for it to be a fully functional unit. After all the procedures and approvals, the transfer process is expected to be completed in the next one year. Tata Motors has appointed Shailesh Chandra (currently President of EV and Corporate Strategy) as the President of PV business with effect from April 1, 2020.
Strict emission norms, push towards electrification, and autonomous technologies are transforming the passenger vehicle business. The group's passenger vehicle unit will also house the electric vehicle business, which is regarded as critical to the future of the automobile industry amid the push for a cleaner environment.
Automobile sales in India have been seeing a downward shift in the past 16 months, and the recent coronavirus lockdown all over the nation will further stymie the production units of the company. The after-effects will be felt for some months to come. The financing of new automobiles is bound to slow down too. The automobile sector in India has seen major losses in recent times, with nearly half a million losing their jobs.
Moody’s Investors Service has already downgraded Tata Motor’s credit rating. The company urgently needs an investor to revive sagging sales and an economic downturn in its passenger vehicles business. JLR UK was planning to issue US bonds in January but had to shelve the plans as investors were not too happy to put in money considering the Coronavirus scare that had already gripped China. As a result, the interest rates were too prohibitive.
Tata Group has been exploring strategic alliances for its Jaguar Landrover business for a long time, according to industry watchers, though the conglomerate has been denying such a move. Tata Motors had engaged in talks with Chery Automobiles in 2014, followed by Groupe PSA in 2015 and Volkswagen Group in 2017, reports The Economic Times.
Tata Group bought the Jaguar XE sedan and the Land Rover Discovery sport utility vehicle from Ford Motor Co. in 2008 for $2.3 billion. Automobile experts say that Tata Motors will be suing the in-house built AMP and the modified D8 platform borrowed for Jaguar LandRover along with the IMPACT design architecture to drive passenger vehicle manufacturing in the future. “A move towards immediate subsidiarization of the PV business is the first step in securing mutually beneficial strategic alliances that provide access to products, architectures, powertrains, new-age technologies, and capital,” said the Tata Motors in a statement.