Chinese automaker Chery does NOT want to buy Tata Motors’ car business now: Here’s why

Tata Motors has been in the automobile business since 1945 now and has a vast experience. Tata launched the Indica – the first indigenously-developed passenger car in 1998, which was also the first hatchback from the brand. Since then, the homegrown manufacturer has come a long way. However, due to the current situation in the market and continuous fall in the sale of cars, the manufacturer wanted to transfer the passenger vehicles business unit (PVBU) to a separate entity. The potential buyer – Chery Automobiles of China – seems to have put off the purchase due to the pandemic, and other geopolitical reasons.

According to TOI, Tata Motors announced in March that they are looking to transfer the Indian unit to a separate entity. The Passenger Vehicles Unit, which deals with the passenger car launches is facing declining sales for last 16 months now. BW Autoworld now reports that because of the recent government scrutinization on the business deals and investments from China, Chery Automobile Co. Ltd has deferred the plans to buy any stake in the Tata Motor’s PV unit.

Chery Automobile Co Ltd, which has a JV with Tata’s subsidiary Jaguar Land Rover (JLR) in China was expected to buy up to 49% stake in Tata’s PV unit. The transaction would have allowed Tata and Chery to develop new products, especially electric powertrain solutions.

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The report further says that due to the current geopolitical situation and the Indian government’s changes in the FDI rules, Chery Automobiles has decided to put the investment on hold. Chery Automobile has been planning to enter the Indian market for a long time now and the JV between both the companies would have provided a smooth entry for the Chinese manufacturer. However, with the new development, we may get to see Chery Automobiles to enter the Indian market independently and then partner up with Tata Motors for future products. The BW Autoworld report also says that spokesperson from Tata declined to comment on the development whole the Chery Global spokesperson could not be contacted.

Tata Motor’s owned JLR is currently in talks with the UK government for a bailout package due to the COVID-19 pandemic. The size of the package is not known yet but it may get formally announced in the future.

The passenger vehicle segment in India is going through one of the toughest times ever. Most of the manufacturers have suffered from a decline in sales and due to the countrywide lockdown because of the COVID-19 pandemic, the sale and manufacturing of the vehicles were completely disrupted. Tata launched the all-new Altroz earlier this year and facelifted version of the Nexon and Harrier. Tata also launched the all-new Nexon EV in the Indian market. In the coming times, the manufacturer is scheduled to launch the all-new Gravitas and the HBX entry-level SUV. However, the current situation may cause a few changes in the plans in the coming months.

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