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Editorial

Published on: Feb. 26, 2021, 3:51 p.m.
Tata Motors sees a change of baton at the top
  • Illustration: Panju Ganguli

By Business India Editorial

After the untimely death of Tata Motors’ Managing Director Karl Slym on 27 January 2014, the senior management of the Indian truck and carmaker had to search for more than two years before they could find a suitable replacement. The candidate eventually selected for succession was German industry veteran Guenter Butschek who, at the age of 55, took over the role of managing director at Tata Motors on 25 February 2016.

The third foreigner (Carl-Peter Forster, another German, headed Tata Motors for less than 18 months during 2010-2011) to lead the Indian giant since its founding in 1945, Butschek was a graduate of the University of Stuttgart, and had worked for Daimler for 25 years in production, industrialisation, and then in the purchasing department, before serving as CEO at the Chinese subsidiary of the German giant.

Before switching to Tata Motors, Guenter Butschek had assumed the function of the Chief Operating Officer at the Airbus Group, where he was also a member of the executive committee. Taking charge of all group operations at Tata Motors, Butschek made news as one of the highest paid CEOs in India, when he joined the company in 2016. At that point in time, Tata Motors was in a mess; having lost market share, its image was in a shamble following the Nano disaster, with no clear-cut model programme in sight. 

Butschek had the unenviable task of sorting out the mess and, in the five turmoil-filled years that he steered Tata Motors through, the carmaker managed to renew most of its model range, as well as rehabilitate its image markedly. This period had witnessed debilitating spats at the very top level, as well as bad press when the decision was taken to hive off the passenger car division, so that it could either be sold off or be made available for international investment. 

However, by end 2020, Tata Motors was back at number three amongst India’s carmakers. Yes, the losses were at their highest ever too; but then, Covid could be blamed for that. 

So, if the impression is that Butschek did a good job at Tata Motors, why isn’t he staying on? Either the top management was not too happy and had greater expectations or it could be a case of the German having had enough of manoeuvring his way through the corporate maze of a large Indian organisation. During Butschek’s time, the carmaker seemed to have shed a lot of fat and the German was known to be tough and direct – so much so, that many of the comfortable old-timers had to either pull up their socks or were shown the door. 

Industry insiders believe that Tata Motors is in a better shape today than it was five years ago. The Nexon is quite a success and most of their newer products are much better than before, even if all are not quite setting the sales charts afire. The page seems to have been turned since the disaster of the Nano. Yet, they have a long way to go, as they hive off their passenger car division to a stand-alone unit, which may soon have investment from abroad. There are even whispers of inducting a strategic industry investor. This would be a shame since Tatas have built up truly indigenous manufacturing capacity. If Tatas cannot go it alone who can?

  • Is there an issue with Tata Motors’ corporate structure that just doesn’t allow for the more talented to rise or show through?

A lot really needs to be done, and whether Marc Llistosella is the right person for that is the question everyone is asking. With most of his working life spent with Daimler, of which three were in India (when he set up Daimler’s Indian truck operations, Bharat Benz, successfully), Llistosella would seem to be just the right person at the right time, as Tata Motors needs to regain its footing on the commercial vehicle side of the business, having lost ground on the LCV end of the market during recent years. 

The biggest question though is – why did Tata Motors have to get another outsider to lead a company, which is not only based in India, but whose focus remains mainly the domestic market? Couldn’t it have found someone from within its ranks? Isn’t that a reflection of the possibility that Tata’s mid-level managers just do not have the ability or the competence to lead the carmaker? 

During Butschek’s time, some of the deadweight had left, but the ones who remain, are they any better? Is there an issue with Tata Motors’ corporate structure that just doesn’t allow for the more talented to rise or show through? No doubt, Tata Motors is where it is because of the man at the top, but perhaps its problems today are also because of that man.

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