Tata Motors’ move to hire Marc Llistosella as its new Chief Executive Officer and Managing Director is a clear indication of its intent to strengthen its commercial vehicle business. This will be the focus going forward even while the passenger car unit will be spun off as a separate company in the coming months.
“Llistosella played a huge role in setting up Daimler’s bus and truck unit in India. In fact, if it hadn't been for him, the company may not have even managed to take off the way it did in the initial years,” says an industry veteran tracking the commercial vehicle industry.
BharatBenz as a brand has come quite a way since the time it was established a little over a decade ago. Llistosella was the first MD of the Chennai-based company, Daimler India Commercial Vehicles (DICV), which has grown over the years as a serious challenger to Tata Motors and Ashok Leyland.
March 2, 2012: Marc Llistosella, then CEO and Managing Director of Daimler India Commercial Vehicles (DICV) at the unveiling of the BharatBenz trucks in Hyderabad.
It is this aggression and focus that Llistosella is expected to bring to the table when he takes over as CEO and MD from July 1. “The decision by Tata Motors sends out a strong signal that it means business in the commercial vehicle space. After all, this is akin to the family silver that needs to be conserved and grow in value,” adds the veteran.
Tata's CV rivals seeing resurgence
In the April-December 2020 period, most of its impacted by the Covid-induced lockdowns and lack of sales, Tata Motors sold a total of 142,292 commercial vehicles, down 41.32% year on year. CV exports in the same nine-month period were 11,687 units, down 47.75% YoY. Overall CV industry numbers for the April-December 2020 period were 358,203 units, down 37%, with Tata Motors contributing 39.72% of total sales.
Nonetheless, even while the company remains the market leader, it does not quite enjoy its position of near-invincibility as was the case some decades ago. Recent times have seen a resurgence come in from challengers like Ashok Leyland, VE Commercial Vehicles (the joint venture of Volvo and Eicher Motors) and DICV as well as Mahindra & Mahindra in the light CV space.
In the process, Tata Motors has ceded share to these companies even while it continues to stay ahead. The truth, however, is that the aura of formidability which accompanied the brand is no longer around.
It is in this backdrop that Llistosella comes into the picture and will hopefully infuse the much-needed mojo back into the company’s commercial vehicle business. Industry observers also believe that there will be a “huge shakeout” within the ecosystem where employees will need to go the extra mile in delivering results. “Nobody can afford to be complacent and take their place for granted any longer,” they say.
The commercial vehicle business is doubtless the mainstay of Tata Motors’ business and accounts for a lion’s share of its revenue and profitability. It is, therefore, absolutely imperative for it to remain robust especially in these times of new regulations on safety and emissions which will call for huge investments in technologies.
Further, given the big-ticket investments announced by the Union Budget in the infrastructure segment comprising roads and highways, housing etc, there will be a bigger need for medium and heavy commercial vehicles. This is an opportunity that a market leader like Tata Motors cannot afford to miss especially when there are many others waiting to get a share of the pie.
Focus on cleaner fuels
With Llistosella at the helm, there is also bound to be greater focus on cleaner fuel options like electric and perhaps even hydrogen going forward if there is supporting infrastructure to make this a reality. His former company, Daimler has already joined hands with Volvo on fuel cells while the likes of Ashok Leyland and VE Commercial Vehicles will, likewise, push the envelope on new technologies.
Chinese truck makers are also going flat out in the electric mobility space for trucks and buses. For now, even while relations between India and China are not exactly hunky-dory, political analysts maintain that it is only a matter of time before the reality of economics takes over from the political slugfest. There is also some news of troop disengagement happening along the border which will hopefully augur well for greater peace and calm.
Llistosella’s biggest advantage is that he is no stranger to India, having set up DICV from scratch. It is quite likely that someone like him will have traversed the length and breadth of this country during his long stint here which means he will be more than aware of the different regional dynamics within this large landscape.
Those who have interacted with him during the DICV days still recall his aggression and passion in the initial years. Taking on the big and established names in the business was never going to be easy but the fact that DICV weathered a storm like the Lehman crisis in its initial years of setting up the Chennai business while going on to establish the BharatBenz brand is, to quote an industry expert, “nothing short of commendable”.
This achievement becomes even more significant when another powerful European brand like MAN Trucks wound up its India operations even though it was part of the powerful Volkswagen family. Likewise, Scania (again in the Volkswagen portfolio) has had to struggle in India with really little to show in terms of market share.
Llistosella is now on the other side of the fence and will be heading a company which was once the biggest rival of BharatBenz. There is no question that he will pull out all the stops to ensure that Tata Motors strengthens its presence as a leader in trucks and buses.
“Things are going to be very different from now and rival companies will soon realise that it is going to be a very different Tata Motors under Marc Llistosella,” says the industry veteran quoted earlier in the story.
As for cars, it is only a question of time before the intended hiving off of the passenger vehicle business happens. The good news here is that numbers are much better now but there is still a need for scale which will only come about with an ally on board. Realising this, Tata Motors had begun exploratory talks with Volkswagen three years ago but nothing came out of it.
It will be interesting to see what emerges this time around with speculation rife at one point that either Geely or Chery were the top favourites. However, with the present anti-China prevalent in the country, this will make for bad optics.
There is a strong possibility of a partnership happening with Stellantis, the recently merged entity of Groupe PSA and Fiat Chrysler Automobiles (FCA) but this again remains in the realm of speculation at least for now. The only trigger here could be the existing manufacturing alliance between Tata Motors and FCA India but whether this will extend to something more durable and profound remains to be seen.
Analysis: Stellantis and the road ahead in India