Tata Motors is the world’s leading automobile manufacturing company. It is a part of Tata group. The company is one of India’s largest original equipment manufacturers (OEMs) providing wide range of integrated, smart and e-mobility solutions. The company was established in September 1945 by Jehangir Ratanji Dadabhoy Tata as Tata Engineering and Locomotive Company Ltd. It is headquartered in Mumbai, Maharashtra, India.
Tata Motors’ diverse portfolio includes an extensive range of cars, sports utility vehicles, trucks, buses and defence vehicles. It has manufacturing, research and development and design facilities in over 25 sites across India, Europe, China, UK and North America. The company is present in more than 125 countries, with a worldwide network comprising of 9,000 touch points.
Here are some statistics of Tata Motors:
- Founded on – 1945
- Headquarters – Mumbai, Maharashtra
- Country – India
- Industry – Automotive
- Chairman – N. Chandrasekaran
- Revenue – $36,491 million as of March 2022
- Loss – $1,483 million as of March 2022
- Vehicles Sold – 10,86,734
- Number of employees – 73,608 employees in 2022
Table of Contents
Tata Motors Strengths
1. Recognized Brand
Tata motors is one of the leading automobile manufacturer in India with a wide range of integrated, smart and e-mobility solutions in its portfolio. The company is pioneering India’s Electric Vehicle transition and enjoys the considerable advantage in one of the fastest-growing automotive markets in the world. Tata Motors is the largest selling commercial vehicle producer in India and is amongst the top three in the passenger vehicles market.
According to Statista, during 2022, the brand was valued at approximately $23 billion, which is an increase of 12% over 2021. Tata Motors secured the first position as India’s most valuable brand in 2022. The strong brand image gives the company a competitive edge over other players in the market.
2. Strong Financial Performance
Tata Motors’ has seen an increase in revenues during 2022. The company increased its revenues from $33,943.8 million in 2021 to $36,491 million during the year 2022, representing an increase of 7.5% over 2021. This increase was mainly due to increased vehicle volumes, particularly, Tata Commercial Vehicles and Passenger Vehicles. The company sold 372,157 units of passenger vehicles and 367,565 units of commercial vehicles during 2022, as compared to 222,638 passenger vehicles and 267,513 units of commercial vehicles during 2021. Its strong financial performance helps enhance investors’ confidence and improve the growth prospects.
3. Research and Development
Tata Motors focuses on researching, developing and producing new drive technologies, such as hybrid engines and electric cars. The company invests heavily in research and development (R&D) and continually improves its technology to stay ahead of competitors.
In 2022, Tata Motors spent $1,215.1 million on its R&D, which as a percentage of revenue, stood at 3.3%. Extensive R&D activities allow the company to gain a competitive advantage and augment its product portfolio, helping it gain a large market share.
4. Global Footprint
Tata Motors has its presence in more than 125 countries with a global network of around 9,000 touch points. Its operations span across India, the UK, South Korea and South Africa with network of 86 subsidiaries, 10 associate companies, 4 joint ventures and 2 joint operations.
The company has manufacturing, research and development and design facilities in over 25 sites across India, Europe, China, UK and North America. During the fiscal year 2022, Tata Motors generated 29% of its revenues from India region, followed by US (16.4%), UK (11.7%), Rest of Europe (12%), China (15.4%), and Rest of the World (15.5%). Such diversified global presence helps the company mitigate the risks associated with overdependence on a particular market. It also enables the company to enhance its brand equity and provides growth opportunities.*
Tata Motors Weaknesses
1. Shortage of Semiconductors
Semiconductor chips are a key component of the electrical architecture of its vehicles. In recent years, the company has experienced limited access to semiconductors supply, which has in turn impacted its production deliveries.
Government actions due to the COVID-19 pandemic, has contributed to a persistent shortage of semiconductors for the global automotive industry. During 2021, the supply was interrupted due to a fire at the Renesas chip plant in Japan, as well as bad weather conditions in Texas. Such issues can result in decrease in its volumes, thereby affecting its revenues, profitability, and cash flows.
2. Legal Proceedings
Involvement in legal matters not only affects its brand image but also increases the financial burden on the organization.
In the recent past, the company has legal and regulatory proceedings, including claims or counterclaims for damages arising from the use of products or services, as well as claims relating to intellectual property matters, employment matters, tax matters, commercial disputes, breach of contract claims, competition and sales and trading practices, environmental matters, personal injury, insurance, and so on.
3. Net Losses
Tata Motors has struggled to generate consistent profits despite recording increasing revenues, large user base and global presence. The company has incurred net loss of $1,483 million during the fiscal year 2022, as compared to a loss of $1,944.1 million in 2021. The company has invested heavily in new technologies and expansion into new markets through acquisitions, which has resulted in significant losses.
Tata Motors Opportunities
1. New Product Launches
Tata Motors has continued to improve competitiveness of products and launched more than 80 products and over 120 variants during 2022. Recently, it introduced the Tata Punch, the no-compromise SUV offering an exciting mix of tough utility with sporting dynamics.
It also launched the advanced i-CNG technology via its brands, Tiago and Tigor. Also, the company introduced the Tigor (EV), which is the only EV in the country with a Global NCAP 4-star rating for both adult and child safety.
Additionally, Tata Motors launched the first electric sedan under XPRES brand, the XPRES-T EV. The company also launched Ace EV in small commercial vehicles segment. Such extensive launch of new products provides opportunities for Tata Motors to improve its market share.
2. Growing Electric Vehicle Market
The electric vehicle (EV) market is expected to grow significantly in the coming years, driven by government incentives, environmental regulations, and changing consumer preferences. According to Statista, the global EV market is expected to grow by 17.02% (CAGR 2023-2027), resulting in a market value of $858 billion by 2027.
In 2022, Tata Motors remained the market leader in electric vehicles with an 87% share due to a strong response for Nexon EV. This presents a significant opportunity for Tata Motors to expand its market share and increase sales.
3. Strategic Initiatives
The company has entered into various strategic agreements that are aimed at enhancing its business operations. In January 2023, its subsidiary, Tata Passenger Electric Mobility Limited completed the acquisition of Ford India’s Sanand manufacturing plant.
This acquisition will expand its manufacturing capacity to 420,000 units per annum. In October 2022, Tata Motors partnered with Tata Power to develop a 7 MW solar project at its Pantnagar manufacturing plant in Uttarakhand. Recently, Jaguar Land Rover entered into an agreement with NVIDIA to develop and deliver next-generation automated driving systems and AI-enabled services and experiences for its clients.
Tata Motors Threats
1. Regulatory Changes
Changes in regulations related to emissions, safety standards, or trade policies could impact the brand’s business. Non-compliance by the company with applicable laws and regulations or failure to maintain, renew or obtain necessary permits and licenses could hamper the results of its operations and financial performance.
2. Highly Competitive Market
The global automotive industry is highly competitive. Its major competitors include Tesla, Mitsubishi Motors, Chevrolet, Hyundai Motors, and many others. Competitive pressures can lead to high operating costs and reduced profit margins. The competitors may have established brands, larger resources, and lower costs, which could make it more difficult for Tata Motors to maintain its market share.
3. Impact of the Pandemic
Tata Motors’ results of operations and financial position have been impacted by the COVID-19 pandemic. During 2022, the Indian and Jaguar Land Rover business operations has witnessed disruptions at manufacturing facilities, which had negative impacts on its cash flows.
The recent shutdowns in parts of China as the government pursues a strategy of containing the spread of COVID-19 has adversely impacted the company’s supply chains. Also, the company has seen a temporary decline in demand.
4. Over dependency on Suppliers
Tata Motors is highly dependent on a network of suppliers and partners to procure raw materials needed in its production. Fluctuations in prices of commodities, raw materials and energy poses risk for the automotive segment. Also, intense competition for specific raw materials required in the introduction of new technologies can lead to increasing costs or possible shortages in the supply chain.
Thus, rising raw-material prices may have a negative impact on the profit margins of the vehicles sold and thus lead to lower earnings in the respective segment. Any disruptions to the supply chain, such as shortages of raw materials or components, could impact the company’s production and profitability.
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