Ex-head of General Motors (GM) India Karl Slym may not have realised this, but he has a few things in common with Alan Mulally, the global head of his former arch rival, Ford Motor Co.
One, the company Slym has recently taken charge of, Tata Motors, snapped up Jaguar Land Rover (JLR) from Mulally’s Ford in 2007, a decision viewed as disastrous for Tata at the time considering the company’s hefty losses, but now considered inspirational, given JLR makes up 68 per cent of the consolidated sales and over 90 per cent of profits (Slym is responsible only for the Indian operations and not for JLR).
Second, Ford is still around, thanks to one of the most brazen and astonishing rescue acts in auto history, engineered by Mulally — and Slym may have to take a few notes from his former rival, given his new company is seen to be in deep trouble.
Mulally stemmed Ford’s massive losses and declining market share by mortgaging all of its assets to borrow $23.6 billion (Rs 1.26 lakh crore) so he could finance a major overhaul and bring the firm back into the black. Meanwhile, rivals General Motors and Chrysler both went bankrupt and had to go crawling to the government with begging bowls.
Slym doesn’t face such an epic challenge - after all, his company is profitable, has a trustworthy brand, deep pockets and a vast distribution. But there’s no denying it is in quite a pickle. According to data of the Society of Indian Automobile Manufacturers, Tata Motors’ domestic market share has slipped in both passenger and commercial vehicles, and, in September, it experienced the ignominy of being overtaken by Mahindra and Mahindra in monthly auto sales, pushing it - albeit temporarily - from third place into fourth. The car maker has had no new products in two years and has launched just four cars - Vista, Indigo Manza, Nano and Aria - in the past 10, none of which has exactly set the automotive world on fire.
Meanwhile, the one thing that has caught on fire has been the Nano, literally - a number of them burst into flames in 2011, denting its reputation. It should have been a runaway success, selling 700,000 units to date, but has only managed to reach a little over the 200,000 mark.
Maybe, the most damage sustained by the company is in its brand image - as much as 60 to 70 per cent of its passenger car sales, say observers, go to fleet owners and taxi operators, and so its sturdily-built Indicas and Indigos are generally shunned by style-conscious car buyers. This is a serious problem since diesel vehicles, led by the Indica hatchback, constitute 70 per cent of the company’s car sales. If this isn’t bad enough, Tata is way behind the technology curve, procuring its engines from Fiat.
The irony of these slip-ups is Tata Motors should have been the king of Indian automobiles by now. Its Safari and Sumo vehicles paved the way for the rise of the sports utility vehicle. The Nano, as a concept, was nothing short of revolutionary. It had many firsts among which was India’s first indigenous car (Indica) and its first micro truck (Ace).
Hiring Slym is a good first step in trying to reclaim this lost glory. Coming from GM - one of the most bureaucratic organisations, second only to Ford, according to analysts - Slym will have the right DNA to navigate Tata Motors’ own labyrinthian structures. A native of Derby, UK, Slym is no stranger to India. “He has an understanding of the Indian market, has experience in setting up a plant as well as best practices technology, success in getting board approvals and has the ability to handle large projects,” says V G Ramakrishnan, MD, Frost and Sullivan - South.
It helps that he does have a genuine affection for the country. After living in some eight countries, it is in Delhi that Slym and his wife Sally (who met Slym when she was processing his insurance papers after he had gotten into an accident) decided to buy their first house. Apparently, Slym loves to photograph trams in Kolkata - no doubt influenced by his father-in-law who oversees the tramway museum in England. Slym also radiates confidence - enough to appear on a television commercial on behalf of GM in India a few years ago in an effort to boost the auto maker’s image at a time when things were rocky.
Slym’s past India experience also augurs well for Tata Motors. While GM's parent was heading towards bankruptcy around 2010, Slym managed to shield the India unit from the parent’s global woes and successfully made small cars his company’s focus area, introducing many variants including diesel, liquefied petroleum gas and compressed natural gas versions—something that could resonate at Tata Motors. GM India’s modest success with the Spark, the Beat - both small cars - and the Chevrolet Cruze was largely because of him.
But this may not be enough to help him overcome the ossified Tata work culture, says Frost and Sullivan’s Ramakrishnan. The problem is, people have been entrenched in the company for a very long time, he says, and there is a tendency to resist change. Slym will have to work hard to co-opt people and it may take a generational shift to bring in real progress.
That shift already seems to be happening. Forty-nine-year old Slym will be assisted by a team that is both young and experienced. Ranjit Yadav, former country head of Samsung India, will steer the passenger vehicle business, which needs the most amount of work since commercial vehicles are the company’s real breadwinner, bringing in 70 per cent of the company’s sales. Neeraj Garg, ex-director of Volkswagen, is also a new vice-president at the company.
This new generation may just be the best chance that Tata Motors has to achieve the promise it once set out for itself.