Tata Motors to hive off passenger vehicle business into separate unit

The move comes at a time the global PV industry is seeing a rapid transformation

Tata motors Representational image | Reuters

The country’s largest commercial vehicle maker Tata Motors will hive off its passenger vehicle (PV) business, including electric vehicles, into a separate unit as it seeks strategic alliances and long-term sustainability of the PV business.

“Tata Motors board has in-principle approved to subsidiarise PV business (Including EV) by transferring relevant assets, IPs and employees directly relatable to the PV business for it to be fully functional on a standalone basis through a slump sale,” the company said on Friday.

These plans come at a time the global PV industry is seeing a rapid transformation as emission norms are getting tighter, companies are increasingly pushing EVs and autonomous and connected technologies are driving a lot of disruption.

Tata Motors has revamped its PV portfolio completely over the last few years, with successful launches like the Nexon compact SUV and Tiago hatchback. However, the domestic car market is only becoming more competitive. Kia, launched in India last year and its Seltos SUV is among the top selling in the segment. Volkswagen and Skoda are also making a renewed push in the Indian market, with a new product portfolio.

The recent outbreak of COVID-19 is also increasing the challenges faced by the auto industry. The company said it wants to take decisive steps to strengthen the business over the long-term.

“A move towards subsidarisation of the PV business is first step in securing mutually beneficial strategic alliances that provide access to products, architectures, powertrains, new age technologies and capital,” Tata Motors said.

The move will also provide differentiated focus for the PV as well as the CV business and help each of them realise their potential.

Shailesh Chandra, currently the president of Tata Motors EV business and corporate strategy, will take over as the president of the PV business from April 1, 2020, from Mayank Pareek, who will superannuate from the company at the end of February 2021.

Tata Motors shares closed down 0.2 per cent at Rs 70.65 on the BSE on Friday.

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