Tata Motors Unveils Plan to Restructure Commercial Vehicle Unit

Key Highlights:

• Tata Motors plans to demerge its commercial vehicle unit into eight distinct business segments.
• Each segment is expected to generate over $1 billion in revenue and profitability.
• The segments will operate independently with a focus on value creation and leveraging data for growth.
• Tata Motors will restructure into two listed entities: TML for commercial vehicles and TMPV for passenger vehicles and other investments.
• This strategy aims to reduce cyclicality and shift from product-based offerings to service-based solutions.

Tata Motors is set to demerge its commercial vehicle unit, aiming to transform its operations into eight separate, revenue-focused segments. Each of these segments is expected to achieve over $1 billion in revenue and profitability.

Eight Distinct Segments

The identified segments are:

• Heavy commercial vehicles
• Intermediate, light, and medium commercial vehicles
• Commercial vehicle passengers
• International business
• TML Smart City Mobility Solutions
• Digital and non-vehicular (spares, fluids, and aggregates)

Following the demerger, these units will function as independent profit centers.

Focus on Value Creation

Girish Wagh, Executive Director of Tata Motors, emphasized that dedicated teams for each segment will enhance focus on value creation. The company plans to use data to measure revenue, profitability, and other key metrics.

Revenue Potential and Strategy

Wagh believes each segment has the potential to exceed $1 billion in revenue. The segmentation strategy is designed to address diverse customer needs and optimize geographical expansion. The non-vehicular segment will also benefit from a tailored approach to spares, fluids, and aggregates.

Restructuring Details

Under the restructuring plan:

• Tata Motors' commercial vehicle unit, including all investments, will be demerged into TMLCV.
• The passenger vehicle business (TMPV) will merge into the existing listed entity, TML.

After the restructuring, Tata Motors will operate through two listed entities:

• TML, focusing on commercial vehicles and related investments.
• TMPV, covering passenger vehicles, electric vehicles, JLR, and related investments.

Also Read: Tata Motors Aims for Seamless Transition in Commercial Vehicle Split

CMV360 Says

Tata Motors' plan to split its commercial vehicle unit into separate segments seems like a smart move. Focusing each segment on its own goals could help the company make more money and grow faster. This approach should enable Tata Motors to better meet diverse customer needs and adapt to market changes.