Demerger of businesses to help commercial vehicle vertical capitalise on opportunities globally: Tata Motors

New Delhi: The proposed demerger of existing automotive business into two listed entities will help the commercial vehicle vertical become more agile and capitalise on the opportunities available globally, according to Tata Motors Executive Director Girish Wagh.

In March this year, Tata Motors announced the demerger of its commercial and passenger vehicle segments into two separate listed entities to better capitalise on growth opportunities.

As part of the initiative, the commercial vehicle (CV) business and its related investments would be housed in one entity, while the passenger vehicle (PV) business, including electric vehicles (EVs), Jaguar Land Rover (JLR) and its related investments, will come under a separate listed entity.

"The proposed demerger will help us improve focus and make us more agile to capitalise on opportunities in the CV market globally," Wagh, who heads the company's commercial vehicle business, said in a message to shareholders in the auto major's Annual Report for 2023-24.

As per the company, the demerger will help in securing synergies across the PV, EV and JLR, particularly in the areas of EVs, autonomous vehicles, and vehicle software.

On sales outlook, Wagh noted: "Looking ahead, I expect FY25 to be yet another exciting year for the CV industry, given the favourable macroeconomic context, especially in the domestic market."

"Tata Motors' CV business has been delivering strong operational and financial performance," he stated.

"Our focus will be to create a world-class company operating in the CV space, providing superior experience to our customers, better growth prospects for our employees, and enhanced value for our shareholders," Wagh said.

Tata Motors Passenger Vehicle MD Shailesh Chandra informed shareholders that he expects the PV industry to moderate towards a long-term secular growth rate after three consecutive years of strong growth.

Trends seen in FY24 are expected to accentuate with rising customer preference for safer, smarter and greener vehicles powered by CNG and batteries, he added.

"SUVs will continue to dominate the landscape with more options for customers to choose from," Chandra said.

''At Tata Motors, with new nameplates and launches planned, we will continue our growth trajectory and expect to deliver strong growth,'' he noted.

The company will continue to shape the EV landscape with holistic initiatives to expand the market, build preference and increase EV penetration, he said.