Tata Motors in talks with Canada's Magna

Contract manufacturing for Rs 1-lakh car

Tata Motors is in preliminary discussions with Canada-based Magna International, one of the top five automotive component suppliers in the world, for contract manufacture of its much-awaited Rs 1-lakh car.

This has been revealed by sources involved in the negotiations between the two sides.

If the deal goes through, Magna will make the Rs 1-lakh car at many satellite manufacturing plants that will be set up for the purpose, said an official with one of the companies.

In the global automotive industry, contract manufacturing is usually undertaken for specific models that are low in volumes and thus not economically viable for an auto major to manufacture. With respect to the Rs 1-lakh car though, the overall volumes will be large while the satellite plants will have limited production capacities individually.

Feasibility issue


The feasibility of a Magna tie-up for contract manufacturing with Tata Motors lies in the sales goal that the latter envisages, where it intends to reach the car across a scattered geography. Tata Motors plans to sell one million of its one-lakh cars. Tata's West Bengal plant for the one-lakh car will have a built-up capacity of 500,000 units on an annual basis; for the remaining 500,000 units, there are plans to set up satellite plants across the country at strategic locations that would make it cost effective to manufacture and sell the car in the shortest time possible.

Magna may not build all the possible satellite locations in the country but is likely to put up the majority of them due to its expertise in the field of contract manufacturing since 1979, said one of the officials who was part of the discussions. The global components supplier has been doing contract manufacture for several companies such as GM (Saab convertible), BMW (X3), DaimlerChrysler (G-Wagon, E-class-4WD, Chrysler 300C, Chrysler Voyager, Jeep Grand Cherokee, Jeep Commander). Other players


Besides Magna, there are other automotive players such as Pininfarina of Italy and Karmann, Germany that take up similar contract manufacturing projects. Magna's presence in the country (through its subsidiary Magna Steyr-major component supplier) and its expertise at producing various kinds of cars on a single manufacturing line give them the edge over the others, said the official.

It is not Canada's Magna . Tata's Rs 1-lakh car to run on Fiat power !


Read this>>http://economictimes.indiatimes.com/articleshow/361220.cms

MUMBAI: Tata Motors has roped in joint venture partner Fiat to collaborate on the engine technology for its Rs 1-lakh car. The prototype for the small car is believed to have been made at Tata Motor's Pune plant, and Fiat is learnt to have worked with the former’s core team on the engine technology, according to sources.

Industry sources said before Fiat came into the picture, Tata Motors had tested a 550-565 cc rear engine on the Rs 1-lakh car, which they discovered was not powerful enough for the four-seater. The company then began work on a 750-800 cc engine. The Fiat tie-up happened around the same time, and Tata felt that the Italian giant’s expertise and strengths will help smoothen the process.

\"Fiat's involvement in the Rs 1-lakh project and other future Tata Motors launches is inevitable, given the Italian company's established position in state-of-the-art car technology. But the presence of the foreign partner is likely to push up project cost in form of royalties and technology fees,\" warned an industry expert. A Tata Motors spokesperson declined comment.

The Rs 1-lakh car is likely to be rolled out some time in early 2008 from its production facility in West Bengal. The company hopes to target sales of 500,000 in the first year and about a million vehicles by the third year. This is not Tata Motors' first brush with an Italian collaborator. The company's flagship platform — the Indica — was co-developed by Italian design house Idea.

There have been talks about Fiat's likely involvement in Ratan Tata's dream project since July, when Tata Motors and the Italian partner formally announced their intentions of setting up an industrial joint venture. But at that time, both companies said their relationship would be restricted to the scope of the MoU.

Fiat CEO Sergio Marchionne, at a press event in Venice in September ‘06, also said the company is considering developing a low-cost car with its Indian partner Tata Motors.

\"It will be in the short term, as they have already done most of the work. We will add our know-how and maybe the money.\" But Tata Motors clarified that the reference was not to the small car.

Also, though the MoU between the two companies was signed in July 2006, Tata Motors and its Italian partner are yet to formalise their relationship by forming a joint venture. Sources said the delay could be because the companies are discussing areas where they could collaborate, many of which are not covered in the original MoU.

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Bala

TATA's rupees 1lac car will have 2 wheels + 2 bullocks to pull. Guys please think practical, at the current cost economics it is impossible to have a Rs.1lac car . I have been hearing since 1990's TATA's Rs.1Lac car is going to arrive soon. Since then Rs.One Lac lost its purchasing power by at least 15-20%. In fact TATAs shoulbd try to bring a Rs. 1,50,000 car, which can be comfortably driven on the indian roads with climbs, drops and potholes.