Best Business Schools in Kerala, Trivandrum | Asian School of Business

Prof. C. Krishna Kumar

The Tata Group wanted to get into the passenger car segment in India that was dominated by Maruti and Hyundai. Instead of going for a collaboration with a foreign partner, Ratan Tata, Chairman of the group, decided to develop the car indigenously. The result was the INDICA.

The timing of the launch in 1998 was not right as the passenger car industry was going through a rough patch in India. Eventually, Tata decided to sell the passenger car business. During a trip to India, Ford Motors of US had shown an interest in buying the car division of Tata to get a stronger hold in the Indian market.

Ratan Tata decided to go to the Ford headquarters in Detroit to finalize the deal. A rude surprise awaited them there. According to a report that came from the Press Trust of India, Bill Ford, the chairman of Ford told Tata, “You do not know anything, why did you start the passenger car division at all?”

After the humiliating visit, the Tata team returned to India and decided to improve the quality of the car. A new version, Indica V2 was launched. The fuel efficiency and relatively lower maintenance costs made it a favourite among taxi drivers and fleet operators.

Nine years later, the 2008 recession found Ford Motors in deep financial trouble. The British brands, Jaguar and Land Rover were poorly performing divisions of the company. They turned to Tata for support and Ratan Tata agreed to buy these companies for $ 2.3 billion.

Tata was able to turn around the companies and soon it became the mainstay of Tata Motor’s finances. During the period 2011 to 2018, Jaguar Land Rover generated over 14 billion pounds of profits to the Tata Group.