Tata Motors-JLR’s SUV plans take shape

New Delhi: Tata Motors Ltd, India’s largest automobile maker, may be just around a year away from launching the first of two vehicles that are the outcome of its collaboration with British marquee brands Jaguar and Land Rover (JLR), which it acquired eight years ago for $2.3 billion from Ford Motor Co.

Tata Motors has awarded contracts to three key Indian auto parts suppliers to source components for sport utility vehicles (SUVs) being built in association with JLR, two people directly involved in the matter said on condition of anonymity.

The SUVs will be built on a platform inspired by Land Rover’s Freelander, the two people, both executives at auto parts makers, said.

Tata Motors plans to sell 80,000 of the vehicles globally across South, South-East and West Asia annually, they added.

Mint learns that Tata has identified Noida-based Motherson Sumi Systems Ltd for supplying wiring harnesses used in electrical systems of vehicles; Delhi-based Sona Group will supply steering systems. Japanese tyre maker Bridgestone Tyres India will be the official tyre partner for the SUVs.

The first SUV is likely to be rolled out as early as the end of 2016.

“The trial runs will start from April-May. The prototype will be ready by then,” said one of the two people cited above.

A Tata Motors spokeswoman declined comment on future products. Emails sent to Motherson Sumi, Sona Group and Bridgestone Tyres remained unanswered till press time

Mint reported in September 2013 that Tata Motors was exploring synergies with its UK subsidiary to build two SUVs codenamed Q501 and Q502, aimed at the global market.

Tata group’s then-chairman Ratan Tata told shareholders in Tata Motors’ 2010-11 annual report that while JLR and Tata Motors are looking “to optimize the synergetic strengths between JLR and Tata Motors in India, an examination is also underway on joint engine development programme which would have manufacturing facilities both in the UK and India”.

There are three aspects to this development, said Mahantesh Sabarad, deputy head of research and equity at Mumbai-based brokerage firm SBICAP Securities Ltd.

First, Tata Motors will enter the premium segment for the first time, he said.

Two, “while the segment may be very small in terms of volume, it gives you a strong brand visibility”.

“The third and most important aspect to look out for will be the drivetrain that Tata builds,” Sabarad said. “Success of these products will depend on that.”

The second person familiar with the development said the company is looking to position the first vehicle between Mahindra and Mahindra Ltd’s XUV 500 and Toyota Kirloskar Motor Pvt. Ltd’s Fortuner.

Mahindra sells its SUV in a price range between Rs.11 lakh and Rs.15.5 lakh while Toyota’s Fortuner is positioned between Rs.24 lakh and Rs.27 lakh.

After exploring synergies and possibilities with JLR, Tata Motors has put together a team of at least 50 engineers for the project, this person said.

“JLR support will come in chassis design, mainframe support and testing,” he added.

JLR will also help with the architecture, performance, technologies and body. Another Tata group firm is expected to help with information technology, programming and analytics.

It is not clear if JLR will also utilize the platform to build products for its own portfolio.

A consultant said Tata Motors may need a separate sales strategy to market the products.

“Since these products will be expensive by Tata standards and considering the poor acceptability of its brands in the passenger vehicle segment, it should think of an out-of-the-box strategy to sell these products,” this person added, asking not to be identified because his firm does some work for the Tata group.

The “Nexa kind of approach may work but Tata Motors will have to be extremely careful as the risk attached will be huge”, he said.

Nexa, pitched as a premium sales network by Maruti Suzuki India Ltd, is the strategy of India’s largest car maker to tap customers who have driven Maruti for a while now and are now switching to Japanese or European car brands.

To be sure, Tata’s recent launches in the SUV segment have proven to be duds for reasons such as high pricing and bad positioning of the products.

The Aria was launched in 2010 as India’s first crossover between a sedan and an SUV, but it failed to boost Tata’s sales as it was seen as too expensive at Rs.13.18 lakh in Mumbai. A stripped-down version of the vehicle was introduced in 2012 for Rs.9.95 lakh, but failed to attract customers.