Tata Motors plans a long drive with China’s Chery Automobile
Tata Motors and Chinese carmaker Chery Automobile are holding talks to explore possible tie-ups, which may include sharing of vehicle platforms.
Talks with Chery have been going on for the past couple of years, people close to Tata Motors said.
When the Indian automaker was working on its 2020 strategy about 12-18 months back, it had considered buying some of Chery’s platforms, they said. Chinese newspaper Nanfang Daily has reported that Chery was in talks to sell the platforms of its QQ, A1 and M1 micro sedans and the A3 compact car to Tata Motors to raise capital and ease its debt burden.
“It is a very broad-ranging talk right now, with nothing specifically defined as yet,” said a person close to Tata Motors.
“Teams have been visiting, but there is no direction yet as synergistic benefits are minimal,” another person with knowledge of development at Tata Motors said. Chery did not immediately respond to an e-mail seeking comment. A Tata Motors spokeswoman said “as a part of our continued explorations in key markets, we continue to have discussions for potential opportunities for collaboration with many players including those in China.”
Tata Motors already has a tie-up with Chery through its Jaguar Land Rover (JLR) unit. The UK-based luxury-vehicle unit of Tata Motors last year got the approval from Chinese authorities to set up a joint venture with Chery.
Buying out a tried-and-tested platform has its benefits — developing a new one is an expensive and time-consuming — and Tata Motors has done that in the past. The company bought the Renault Traffic Van platform, on which it built the first Winger Van. It was also looking to buy the latest Traffic platform from Renault to develop the next generation of the Winger, but no decision has yet been taken.
For Tata Motors, launching a new vehicle in the popular mini segment to rival Maruti Suzuki’s Alto, the top selling car in India, could help get a faster and cost-effective entry into the segment. The company has been one of the worst performers in the country’s car market, which is set to post a fall in sales for the second straight year.
According to the second person, bringing any current products of Chery to India is “highly unlikely” since that would require significant changes to the vehicles.
“Plus, they don’t have a diesel offering too,” he added, referring to the changing consumer preference in India towards vehicles powered by the cheaper fuel.
The Chery platforms were explored for an entry into the minicar segment. This was during the time when Tata Motors was formulating its strategy for future product portfolio. However, the company decided to invest in its own platform, this person said.
“The option was to look at a quick fix of buying out a worn out platform, which will deliver the car quickly, or look at a modern product, which may take time but delivers long term benefits. It seems Tata Motors is choosing the latter,” he said.
Tata Motors has already started investing in an advanced modular platform, which is code named X4.