India’s Tata Motors, the nation’s largest vehicle maker, purchased bankrupt Daewoo Commercial Vehicles in 2004 in order to gain entry into the South Korean market and access to Daewoo’s technology. It renamed the company Tata Daewoo. Tata Group, of which Tata Motors is a key member, is one of India’s four largest conglomerates.

Tata Group has been recognized by Bloomberg Businessweek as number 13 in the list of the world’s 50 most innovative companies. It has developed an ‘Innometer’ to stress and measure creative goals and accomplishments against global or domestic benchmarks (Arndt and Einhorn, 2010). Tata Motors itself was earlier recognized as one of India’s top corporate innovators for developing an ultra-low-cost passenger car and a more effective method of distribution for it (Kripalani, 2005).

Tata Motors is the world’s fourth largest manufacturer of medium- and heavy-duty commercial vehicles. It has two in-house engineering centers and India’s only Certified Crash Test Facility. A joint venture with Cummings Engine Company of the US in 1992 introduced advanced emission control and testing. It has upgraded its entire range of 4- and 6-cylinder engines to meet international emission standards, using the improved engines in all of the Indian market and over 70% of its export markets (limited only by the requirements of its customers) (www.tata-motors.com and associated websites). Tata Motors sells very roughly equal numbers of passenger cars and trucks, with two-thirds of its earnings coming from the truck and commercial vehicle business.

In spite of the importance of its trucks, except for emission controls their design had been changed little over the years while trucks produced in the more developed nations were being improved. In the early 2000s, Tata Motors recognized that India’s rapid development and the upgrading of some of India’s roads provided an opportunity for more powerful and more comfortable trucks to be driven greater distances than Tata’s traditional offerings.

Tata Motors also faced a competitive threat from the higher quality, heavier duty, more comfortable trucks made by Daimler and Volvo that are becoming increasingly familiar on Indian roads.

In cooperation with its new acquisition, Tata Daewoo, the parent Tata Motors developed a new line of heavy trucks branded Prima. They carry the same payload but have larger engines and are more comfortable to drive, allowing drivers to cover up to twice the distance they do in the older Tata trucks. They are thus in a position to compete in the market entered by Volvo and Daimler. However, the narrowness, poor maintenance, and crowded conditions of most of India’s roads, and the higher cost of the Prima line, indicate that Tata’s cheaper vehicles are likely to maintain a large share of the Indian market in the near future. The new trucks were also seen to have a potential market in Korea. The Prima line was introduced in India in mid-2009, selling 50 in the final six months of the year, and introduced in South Korea in September, 2009, selling 400 there in the final three months of the year (Leahy, 2010). In 2014 Tata introduced the first truck racing championship in India called the T1 Prima. In 2014 the managing director Karl Slym died in Bangkok, Thailand after a fall from the 22nd floor of the Shangri-la hotel.

Questions

1. Does the purchase of Daewoo Commercial Vehicles seem to have been a wise decision for Tata Motors. Why?

2. Do the initial sales of the Prima line in India seem to justify the decision to market it there? Why?