Tata, the Indian carmaker, plans to enter Europe's passenger car market using its current distributors in Italy, Spain, Benelux and the UK.
Tata will seek to re-enter France and establish markets in Portugal, Austria and Switzerland. 'We haven't decided on distribution' yet in France, said Shujat Ali Khan, Tata's deputy director of international sales, but the distributor could be Tata's long-time partner Jardine International Motor Group of Hong Kong.
Italy has been Tata's best market. It has sold 18,000 pickups and other trucks there over the last three years. By moving into passenger cars, Tata hopes to sell 50,000 units a year in Europe by 2005.
Tata introduced its cars - a 4x4 Safari and an unnamed supermini - at the Geneva auto show.
Tata expects to achieve its real volumes and profits in India.
Farrokh Kavarana, executive director of Tata Engineering and Locomotive Co. Ltd., said Tata expects the India car market to grow from 250,000 to 600,000 in five years.
Tata expects its car production to grow from zero to 150,000 in that time. All but 20,000-30,000 would be sold in India, giving Tata about 20 percent of the market.
In India, Tata has long been the dominant truck maker, with about 80 percent of the market. A new dealer network is being established for passenger cars.
About 70 dealers have signed on already, and Tata wants 150 in India within 18 months.
Fewer than 10 dealerships will be controlled by Concorde Motors, a joint-venture company between Jardine International and Tata. 'They will be the blueprints for the rest' of the franchised outlets, said Kavarana.
Dealer margins in India have been 3-5 percent. In Europe, the margins on passenger cars will be more in the range of 15-25 percent.
In India, the small car will sell for about $6,000, the same as the market leader there, the Maruti 800.
'And remember, 40 percent of the $6,000 is taxes,' said Kavarana. In Europe, the car will be priced about $8,000.
The cost of manufacturing, he said, is just over $3,000.
Tata will seek to gain a reputation for offering good value for money, being price competitive, and styling that is contemporary for Europeans, said Kavarana.
'It's early days on quality,' he said. 'We are transforming ourselves. We've got to get it right.'
Tata is going into the international car business partly out of national and corporate pride, and partly because it needs to go somewhere.
'When you've got the dominant share, 70 percent or more, where do you go? How much further can you grow?' asks Kavarana.
He quoted the company chairman, Ratan Tata.
'In India we make nuclear power plants, we make rockets. Why can't we make a car?'