Tata Motors upgrades cars as rivals launch new ones

By Aradhana Aravindan

PUNE (Reuters) - Tata Motors on Wednesday launched eight upgrades of existing models, including a CNG-fuelled version of its low-cost Nano, but said little about plans for completely new vehicles to help reverse sliding car sales in India.

In recent quarters, strong performance at its luxury Jaguar Land Rover unit has helped compensate for weak passenger car sales at home, where Tata is losing market share to rivals Hyundai Motor Co <005380.KS> and Maruti Suzuki, which last year launched its successful Ertiga multi-purpose vehicle.

"There have been new launches by Tata's competitors every year, but as far as the company is concerned, they have just been launching refreshed or slightly modified versions of their existing cars," said Yaresh Kothari, analyst at Mumbai-based Angel Broking.

 

Tata Motors' passenger vehicle sales fell 15 percent in the financial year that ended in March. It has also lost traction in the sport utility vehicle (SUV) segment, where it was once the market leader, to local rival Mahindra and Mahindra .

The Nano, launched to great fanfare in 2009 as the world's cheapest car, has been a disappointing seller, with sales down 27 percent in the last financial year to 53,848. The company has not launched an all-new Tata-branded passenger vehicle since its Aria crossover in 2010.

Karl Slym, who previously headed the India operations of General Motors , became Tata Motors' managing director in October and has been tasked with reversing its market share fall at a time when high interest rates and rising ownership costs have forced many Indians to put off car purchases.

Annual car sales in India fell for the first time in a decade in the financial year that ended in March and are expected to rise just 3-5 percent in the current year.

"We are not going to come up with a brand new vehicle today, after that short period of time," Slym told reporters on Wednesday at the company's plant in Pune.

"We have a product portfolio plan through to 2020," he said, adding that new products would be both in existing Tata Motors segments as well as in new segments. "We don't play in a couple of segments which have shown growth. We don't have a soft roader SUV," he said.

SUVs, especially compact SUVs and soft roaders, or those used mainly on city roads such as Renault's Duster, have been a bright spot for the auto market in India, where sales fell for the seventh consecutive month in May.

Earlier this week Ford Motor Co began shipping its locally made EcoSport compact SUV. Tata Motors also has plans to launch a mini-SUV.

Tata plans to invest more than 75 billion rupees in its passenger vehicle business over the next five years. Less than 30 percent of that has been earmarked for facilities or upgrading hardware, leaving the rest for new products.

"The company needs to launch a new vehicle on an all-new platform at a competitive price," Kothari said. (Editing by Tony Munroe)