Tata Motors has denied reports it plans to sell up to 49 per cent stake in the passenger vehicle (PV) business, but said securing a mutually beneficial alliance is a priority.
A news report had said this week that the country’s largest commercial vehicle maker plans to drive in a foreign partner in the domestic PV business and was in talks with multiple automakers from Europe and East Asia to sell up to 49 per cent stake. The names of Chinese car makers like Changan, Chery and Geely have been doing the rounds. Tata-owned Jaguar Land Rover already has a joint venture with Chery to make and sell luxury cars in China.
“All such published news about 'Tata Motors to sell up to 49 per cent stake in PV business and the names of potential partners/investors mentioned is incorrect and misleading,” Tata Motors said in a statement.
On March 27, Tata Motors had announced plans to hive off its PV business, including electric vehicles, into a separate unit. This would be a first step in securing mutually beneficial strategic alliances, it had said.
“Subsidiarisation of the PV business enables the realisation of its full potential with mutually beneficial strategic alliances and better access to products, architectures, powertrains, new-age technologies and capital,” said Guenter Butschek, MD and CEO of Tata Motors in its annual report.
The COVID-19 pandemic, which led to nationwide lockdown over April and May has hit the automobile industry hard. The sector, which had already hit speed bumps in 2019, saw its sales slump further and supply chains were disrupted due to the pandemic.
In the April-June quarter, Tata Motors reported a standalone loss of Rs 2,154 crore, compared with a year ago loss of Rs 147 crore. Its standalone quarterly revenue stood at Rs 2,687 crore, down 80 per cent from a year ago.
In the June quarter, Tata Motors’ total domestic PV volumes plunged 60 per cent. The launch of the Altroz hatchback in January this year and the refreshed Nexon SUV should help sales pick up at Tata Motors domestically, going ahead.
“Securing a mutually beneficial alliance is a priority. However, it is not an imperative for today but an opportunity to be secured for tomorrow,” the company said on Wednesday.
Aditya Makharia, institutional research analyst at HDFC Securities expects the subsidiarisation of the PV business to happen over 9-12 months.
“It will lower the capital intensity for the India business,” he said.
Tata Motors and German car giant Volkswagen had explored a partnership to develop cars for emerging markets in 2017. However, those talks were called off in just five months.
Tata Motors shares were trading up 1.3 per cent at Rs 112.80 on Wednesday.
