Tata to import low-cost parts & auto transmissions from China

Ratan Tata has revealed Tata Motors’ plans to import auto parts from China for cost benefits. The focus will be on importing automatic transmissions (AT) for its vehicles in India, The Economic Times reported.

The company is expected to source CKD kits including AT components and assemble them domestically. The competitive prices offered by Chinese manufacturers would benefit Tata Motors, without Tata having to invest much larger sums in R&D and development of entirely new transmission technology - for what are still considered to be relatively small volumes.

Of late, automatic transmission technology is increasingly being sought after in the Indian auto market. The leading car manufacturers in India like Maruti Suzuki and Hyundai have had an AT option on some of their vehicles for a while now. However, Tata Motors does not provide automatic transmissions on any of its vehicles at the moment.

Cheaper components, cheaper cars

This move could also allow Tata Motors to exploit the vacuum in the sub-10 lakh rupees space for Diesel AT cars. A conceivable case has been made here: The case for an Automatic Indica.

While these imported components are expected to be cost efficient, they will not be technologically cutting edge in any way. This is perhaps a careful strategy by Tata Motors to test the waters steadily at a low-risk investment and then possibly develop the technology locally, depending on how it fares in the market.

Interestingly, AT technology is not foreign to Tata Motors, as was evident in its Aria concept model that was showcased at the 2012 Auto Expo. They could have also possibly procured the technology from their subsidiary Jaguar Land Rover.

Instead the company’s eagerness to import indicates a clear plan to focus on cost efficiency at this stage.