Karl Slym has a Fix for the ailing Tata Motors
Image: Vikas Khot
Age : 50
Career : Started at Toyota as senior manager; spent more than 25 years in GM across roles and geographies, including seven years as head of GM’s India operations. Joined Tata Motors in October 2012.
Education : MSc in business administration, Stanford University
Interests : Music, Bollywood, cricket and travelling
It was October 2012. Karl Slym, the new managing director of Tata Motors, had just joined office. And he was keen to get a pulse of the organisation quickly. Slym asked Tapan Ghosh, regional manager (west) in the passenger vehicles division, to fix up a meeting with Kasturi Wasan, owner of Wasan Motors, one of the oldest and largest dealers of Tata cars in the country. The meeting was fixed at Wasan’s Tata-Fiat dealership in Chembur, Mumbai, at 5 pm. Slym walked into Wasan’s sprawling fourth floor office, overlooking the Sion-Trombay road, with two of his colleagues—Prashant Fadnavis, head of marketing services, and Ghosh. After exchanging pleasantries, Slym got down to business, “So Mr Wasan, how is it going?”
Wasan had been waiting for this opportunity for a long time and he didn’t hold back. Sales had plummeted to 225 units per month compared to an average of 900 units in 2008-09. Despite all kinds of marketing pushes—buy a Nano with a credit card, exchange your old motorcycle for a Nano—the car had remained a non-starter. It was the same story with the Manza, the Indica, the Safari and the Aria. There were hardly any footfalls in his showroom and his sales staff was demoralised.
“With these issues, I will not have enough money to even pay salaries to my staff. In fact, I have been thinking of closing this dealership because I have been making losses for the last two years,” he told Slym.
The new MD heard him out patiently. At the end of the meeting, which lasted about 90 minutes, Slym said, “No, Mr Wasan, don’t give up. Give me 90 days and I will do something. If you still think your dealership is not viable, then you are free to go.”
Slym’s promise of 90 days ended in December 2012. It is now actually more than 180 days but Wasan hasn’t heard from him. Ghosh has since quit to join Hyundai. According to sources, in the last financial year Wasan’s Tata dealership made a loss of about Rs 6 crore. This March, he sold only 70 units. Now he is seriously contemplating pulling the plug. He won’t be the only one to have done that. In the last two years, Tata Motors has lost three large dealers in Mumbai, one in Pune, one in Chandigarh, two in Hyderabad and two in Delhi.
Today Tata Motors’ domestic car business is on a sticky wicket. Sales for FY2013 dropped by almost 29.2 percent to 2,22,112 units from 3,13,710 units in FY2012. In the December quarter, the standalone business posted a loss of Rs 458 crore. Analysts are expecting another loss in the current quarter. On the products front, in 2012-13 the Nano has utilised only 20 percent of its production capacity of 2,50,000 units at Sanand, Gujarat. Almost all of Tata’s other vehicles (Indica Vista, Manza, Safari, Sumo Grande, Aria) have been beaten in their respective segments by local and global competitors.
A former Tata Motors senior official, who spent more than a decade at the company and spoke on condition of anonymity, says this is the result of lack of focus, poor allocation of resources and narrow vision for the car business. “In the last five years, there were just too many things vying for attention. First, there was making the Nano itself. Then Singur and taking the plant to Sanand. Then fires in the Nano. Then Jaguar Land Rover. All of this meant that everything that had been planned for the car business was getting postponed. And we never had enough money to invest in building a pipeline for our existing brands,” he says.
Of course, Cyrus P Mistry, the chairman of Tata Sons, has taken notice. He asked the organisation to buckle up in his Lake House address to employees on April 1. “The last four years witnessed fierce competition in the passenger car market, with the entry of seven new global manufacturers and the introduction of 150 new models. The commercial vehicle segment too faced challenges with the entry of new players like Bharat Benz,” he said. “It is time to meet them and beat them in their backyard.” In his meetings with the top management, Mistry has been pushing towards making the car business profitable, developing “futuristic products that are truly world class” and to draw lessons from the turnaround of Jaguar Land Rover.
Lord Kumar Bhattacharyya, founder and chairman of the Warwick Manufacturing group, who was part of the five-member search committee that selected Mistry as Ratan Tata's successor believe Mistry will do he can to make the company a success. “Let me tell you, Cyrus is a very forensic man. He has got a tremendous mind. And he will not go on a whim or fashion, he will do whatever is right for the company as a business. And it has to make money. Cyrus is not going to tolerate any weaknesses in the organisation. Car companies cost a lot of money, they should not only be designed well but also made well and sold well.”
Lord Bhattacharyya should know. He has seen the company’s steep decline from close quarters and believes that Ratan Tata’s vision for the car business was let down by the senior management at the company. “Ratan, as far as cars are concerned, it is in his blood. But he is not going to go and sell cars. It is up to Tata Motors to sell. Somehow, Tata Motors lost touch with the market. They had an iconic car like Nano, which Ratan had produced but it never got the due respect in marketing. If it was in any other country, it would have been a great success,” he says.