LATIN AMERICA AUTOMOBILE MARKET

When a salesman at the International Chevrolet dealership here took $500 off the sticker price, then threw in easy credit, free insurance and the title fee, she took the plunge. Tello recently became the proud owner of a new Chevy Spark GT. It's the first new car that the 41-year-old elementary school teacher has owned.

"I've wanted one for a long time, but the down payment was always too high. Here I found the terms were just what I needed," said Tello, as she drove her sporty red $14,000 compact off the lot. "This will help me with my second job, going around to little towns selling perfumes and cosmetics." Vehicle sales growth in China, now the world's No. 1 car market, is grabbing headlines. But Latin American countries including Brazil, Peru, Argentina and Colombia also are seeing car sales skyrocket. A rapidly expanding middle class and easier credit are feeding the regionwide boom. "Before, buying a new car was just for the upper class," office manager Carlos Arturo Pena said as he kicked tires at the Chevy dealership in Bogota. "Now, it's much more within common people's budgets." In Brazil, the region's top market, more than 3.5 million cars and light trucks were sold last year up 86% compared with 2006. Its economy is growing fast and wages are rising. "In a macroeconomic sense, Brazil has greater stability, more per capita income, more jobs and more credit than before," said a spokesman for Brazil's largest car manufacturers association, ANFAVEA. "And consumer confidence is rising, so people are more likely to join the ranks of car owners." In percentage terms, car sales are even more impressive in Peru. The market is tiny, with just 116,000 cars sold in 2010. Still, that was triple the number sold in 2006. In Argentina and Colombia, respectively, new-car sales last year gained 50% and 25% over unit sales in 2006. The trend continues in most Latin American countries. In Colombia, February car sales totaled 25,527 units, a 51% gain over the same month in 2010. In Chile, February sales grew 37% from a year ago, according to the National Automotive Assn. of Chile. Not all Latin American markets are firing on all cylinders, however. Mexico, whose economy is tightly connected to that of the United States, posted sales of about 820,000 vehicles last year. That's an improvement over 2009, but well down from 1.2 million in 2006. Dealers said the opening of Mexico's market to used cars from the United States has cut deeply into sales. In Venezuela, about 125,500 cars were sold last year. That's down from a peak of about 492,000 in 2007, before President Hugo Chavez began applying higher duties and import restrictions to help rein in Venezuela's inflation, South America's highest. Overall, the region's sales statistics justify the recent comment by GM South America President Jaime Ardila that the carmaker's Latin America operation is its most valuable asset in terms of return on investment and growth.

Economic stability in Brazil and in other Latin American countries has given rise to relatively cheap credit that has made buying a car much easier. For example, Tello bought her $14,000 car with just $1,000 down, or $600 less than the dealer was asking previously. Because loans now can be paid off over five to seven years instead of two as was the custom several years ago, her payments are lower and more affordable. The car market in several countries also has been stimulated by the arrival of several low-cost Asian brands including Chinese models that sell for as little as $7,000, said Manuel Garcia, executive with Ital Motors, the Fiat franchisee for Peru. Latin America has long been an export platform for the world's automakers. But carmakers increasingly are focusing on selling to customers in the region. Hyundai plans to open a $600-million assembly plant next year in Piracicaba, Brazil, that will produce cars for the local market. GM South America is adding a third shift and 1,500 jobs to its Sao Caetano plant to add four new models to its Chevy line offered to Brazilian customers. The expansion is part of a $1-billion investment program in Brazil by GM, the country's leading manufacturer with a 20% market share. But the downside to the car-buying frenzy can be seen in rising gridlock and deteriorating air quality. In Bogota, monumental traffic jams and delays in mass transit projects have made cars a political issue, dimming the popularity of Mayor Samuel Moreno. In Lima, choking pollution has spurred calls for laws requiring owners to junk all cars 20 years or older. Citizen groups are calling on the government in Lima to restrict the number of taxis and buses and to enforce vehicle emission laws.

SWOT Analysis - Tata Motors Limited

The company began in 1945 and has produced more than 4 million vehicles. Tata Motors Limited is the largest car producer in India. It manufactures commercial and passenger vehicles, and employs in excess of 23,000 people. This SWOT analysis is about Tata Motors. Strengths The internationalisation strategy so far has been to keep local managers in new acquisitions, and to only transplant a couple of senior managers from India into the new market. The benefit is that Tata has been able to exchange expertise. For example after the Daewoo acquisition the Indian company leaned work discipline and how to get the final product 'right first time.' The company has a strategy in place for the next stage of its expansion. Not only is it focusing upon new products and acquisitions, but it also has a programme of intensive management development in place in order to establish its leaders for tomorrow. The company has had a successful alliance with Italian mass producer Fiat since 2006. This has enhanced the product portfolio for Tata and Fiat in terms of production and knowledge exchange. For example, the Fiat Palio Style was launched by Tata in 2007, and the companies have an agreement to build a pick-up targeted at Central and South America.

Weaknesses The company's passenger car products are based upon 3rd and 4th generation platforms, which put Tata Motors Limited at a disadvantage with competing car manufacturers.

Despite buying the Jaguar and Land Rover brands (see opportunities below); Tat has not got a foothold in the luxury car segment in its domestic, Indian market. Is the brand associated with commercial vehicles and low-cost passenger cars to the extent that it has isolated itself from lucrative segments in a more aspiring India? One weakness which is often not recognised is that in English the word 'tat' means rubbish. Would the brand sensitive British consumer ever buy into such a brand? Maybe not, but they would buy into Fiat, Jaguar and Land Rover (see opportunities and strengths). Opportunities

In the summer of 2008 Tata Motor's announced that it had successfully purchased the Land Rover and Jaguar brands from Ford Motors for UK 2.3 million. Two of the World's luxury car brand have been added to its portfolio of brands, and will undoubtedly off the company the chance to market vehicles in the luxury segments. Tata Motors Limited acquired Daewoo Motor's Commercial vehicle business in 2004 for around USD $16 million. Nano is the cheapest car in the World - retailing at little more than a motorbike. Whilst the World is getting ready for greener alternatives to gas-guzzlers, is the Nano the answer in terms of concept or brand? Incidentally, the new Land Rover and Jaguar models will cost up to 85 times more than a standard Nano! The new global track platform is about to be launched from its Korean (previously Daewoo) plant. Again, at a time when the World is looking for environmentally friendly transport alternatives, is now the right time to move into this segment? The answer to this question (and the one above) is that new and emerging industrial nations such as India, South Korea and China will have a thirst for low-cost passenger and commercial vehicles. These are the opportunities. However the company has put in place a very proactive Corporate Social Responsibility (CSR) committee to address potential strategies that will make is operations more sustainable. The range of Super Milo fuel efficient buses are powered by super-efficient, eco-friendly engines. The bus has optional organic clutch with booster assist and better air intakes that will reduce fuel consumption by up to 10%.

Threats Other competing car manufacturers have been in the passenger car business for 40, 50 or more years. Therefore Tata Motors Limited has to catch up in terms of quality and lean production. Sustainability and environmentalism could mean extra costs for this low-cost producer. This could impact its underpinning competitive advantage. Obviously, as Tata globalises and buys into other brands this problem could be alleviated. Since the company has focused upon the commercial and small vehicle segments, it has left itself open to competition from overseas companies for the emerging Indian luxury segments. For example ICICI bank and DaimlerChrysler have invested in a new Pune-based plant which will build 5000 new Mercedes-Benz per annum. Other players developing luxury cars targeted at the Indian market include Ford, Honda and Toyota. In fact the entire Indian market has become a target for other global competitors including Maruti Udyog, General Motors, Ford and others. Rising prices in the global economy could pose a threat to Tata Motors Limited on a couple of fronts. The price of steel and aluminium is increasing putting pressure on the costs of production. Many of Tata's products run on Diesel fuel which is becoming expensive globally and within its traditional home market.

Tata Nano set for Latin America launch

Monday, July 27, 2009, 18:14 by Auto Sr. Reporter

Tata Motors and Fiat are reportedly in talks to jointly launch the Tata Nano in Latin America as part of its global roll-out plan for the small car. Tata group chairman Ratan Tata and an independent director of Fiat said in an interview to the Italian news paper La stampa that both the companies have agreed to sell the Mini and the Tata Nano in South America. Tata Motors plans to leverage Fiats marketing network in Latin America and expects the Tata Nano to do well in emerging markets like Brazil, Argentina, Chile and Venezuela. There is no word on the price of the Tata Nano in the Latin American markets. Reports say that Tata is likely to roll out the Tata Nano from Fiats Corbdoba plant in Argentina. Tata Motors and Fiat India had entered into an MoU to manufacture engines, transmissions, and passenger cars at the Corbdoba plant. In 2008, Tata Motors announced the production of pickup trucks at the Corbdoba plant. Tata Motors plans to launch the Tata Nano Europa, a model designed to meet European specifications, by 2011. Recently, the Tata Nano passed the 40 per cent offset crash test, at 56 kmph, and side-impact tests in Birmingham, UK. Earlier, Tata had said that it would look to launch the Tata Nano in the US after the launch of the Tata Nano Europa in Europe. Reports say that in the US too, it will leverage Fiats marketing and sales network. Tata Motors will launch the Tata Nano in Nigeria by 2011. Tata and Fiat are also in talks to launch the Iveco, Ferrari and Maserati in India. The first Tata Nanos were delivered to customers in India, on July 25, 2009. Tata Motors will complete the delivery of the first 1 lakh Tata Nanos by end 2010.