Business

Tata Motors eyes Indonesia
as biggest export market

Indian automotive giant Tata Motors is looking to start filling Indonesia’s streets with its products later this year in an attempt to make Indonesia its biggest overseas market in the next four years.

Tata Motors will start bringing in both its passenger and commercial vehicles in September, following the official launch of its brand in Indonesia last year.

The firm, which now has six dealers and around 30 to 40 workshops across Java and Bali, expects to have 10 dealers to help its operations by the end of this year and to have built 35 dealerships to cater to potential
customers within five years.

Tata Motors managing director Karl Slym declined to confirm its initial sales target or the number of cars and models to be introduced.

“We do have a very confident feeling because we have spent such a long time on our products, trusting the feedback of our brand and vehicles, otherwise I wouldn’t be suggesting that we can [make Indonesia] the largest market outside India in a very short period of time,” Slym told reporters during a conference in Mumbai last week.

Slym said Tata Motors, which sold 350,000 vehicles outside India during the last financial year, was equipped with 50 years of experience in handling market exports in an attempt to grab a big slice of the Japanese auto-dominated market.

Tata Motors was established in 1945 and started its production in 1954, focusing mainly in commercial cars. It started exporting its products in 1961 and introduced its first passenger car, Indica, in 1998.

With an annual income of US$34.7 billion, the company is currently the fourth-largest commercial vehicle producer in the world and the biggest in India, controlling 65 percent of the domestic market. It is also the third-biggest passenger car producer in India after Japan’s Suzuki and South Korea’s Hyundai, with a 12 percent market share.

Tata Motors, which was listed on the New York Stock Exchange in 2004, acquired the likes of South Korean truck producer Daewoo in 2004 and British premium car maker Jaguar Land Rover in 2008.

With a sluggish car sales trend in India due to a global economic downturn, Tata Motors has attempted to expand its export market.

In line with its expansion plan, Tata considers Indonesia a potential pivot that could one day supply vehicles to the latter’s neighbors, after more than 1 million car sales last year and over 6 percent in annual economic growth since 2010.

Tata Motors Indonesian Operations CEO Biswadev Sengupta said setting up a manufacturing plant was among the company’s expansion ambitions.

“But to open a manufacturing plant, we have to reach a critical mass [of sales] and 40 percent of localization, then we can start producing in Indonesia,” Sengupta said as Tata’s Pune Facility, adding those conditions could be met in two or three years after the launch of the company’s products.

Sengupta said the company would probably introduce seven commercial and passenger vehicle models, while refusing to confirm whether the 600-cc Tata Nano, dubbed the world’s cheapest car priced at roughly $1,800 during its debut in 2009, would be among them.

Tata has, among others, commercial cars Tata Xenon and Tata Ace, and passenger cars Tata Aria — a mix between a multi-purpose vehicle (MVP) and a sports utility vehicle (SUV) — and the 1,400-cc hatchback Tata Vista.

Data from the Indonesian Automotive Industry Association (GAIKINDO) shows that MVPs dominate the Indonesian market with 63 percent, followed by SUVs with 18 percent and hatchbacks with 14 percent.

When asked whether the recent fuel price hike might affect Tata’s plan to introduce its products in September, Sengupta said the hike could even be a “blessing in disguise” as most of his company’s products used diesel fuel, which was cheaper and more efficient in fuel consumption.

Fuel prices increased last month from the previous level of Rp 4,500 (45 US cents) to Rp 6,500 for Premium gasoline and to Rp 5,500 for diesel, to curb ballooning fuel subsidies.

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