MUMBAI: Tata Motors yesterday launched a new line of trucks to take on rivals Volvo and Mercedes and bring higher-quality trucks to India. Tata also plans to export the line of trucks, ambitiously named “World Truck,” first to South Africa, the Middle East and Russia, company officials said.
The new trucks are the latest bid by India’s largest commercial vehicle maker to transform itself into a global auto power. So far, Tata’s efforts to expand its global footprint have met with difficulty.
For now, Tata Motors remains an Indian company — in April it sold 37,462 vehicles in India and exported just 1,261.
But Tata hopes to eventually export the Nano, a $2,000 car launched in India this year, to Europe and the US and officials say they aim to sell half their new trucks outside India.
Tata also acquired Ford’s Jaguar and Land Rover brands last year, shortly before the global economic meltdown. It has struggled to refinance a $3 billion bridge loan it took out to pay for the deal. The company said on Wednesday night — just days before the loan came due — that it had managed to extend the maturity of the outstanding $1 billion balance to Dec. 31, 2010. But Tata will pay significantly higher interest on the new loan — 5 percent over the 1-month London Interbank Offered Rate, instead of 0.85 percent to 1.5 percent over LIBOR under the initial loan.
Angel Broking analyst Vaishali Jajoo said Tata’s main competitive advantage on the global stage is pricing, but she expects margins to suffer as the company fights to establish itself in developed markets. “They have to give up some returns to become a global player,” she said. “For the next couple of years, I’m not expecting them to have a healthy cash flow.”
Tata Motors lost 2.63 billion rupees ($54 million) last quarter as cost-cutting efforts failed to make up for withering demand. Company officials said they were “cautiously optimistic” that the new trucks will help boost flagging sales.
