Toyota’s Crisis Provides Learning Opportunity for Tata Motors

Toyota’s recent recalls have the once-lauded company scurrying. Through this crisis, however, another Western market entrant, Tata Motors, should take notice:

About a year ago, when the Tata Nano was unveiled in India, I penned a column (link here) that argued Tata’s strategy in creating this car was to not only stimulate demand (and government action to build roads) in India, but also to selectively target key international automobile markets.

As one of India’s–and the world’s–most venerable conglomerates, The Tata Group has designs on the key U.S. and European markets. Surely, it can sell its teas and even consulting services in the U.S. but when it comes to cars, it is not as straightforward. To date, Tata Motors’ approach has been to slowly lay the groundwork for the “Nano” to infiltrate the U.S. market, as the company is betting on the American consumer’s appetite for a smaller, more efficient car to grow inversely to his/her wallet size.

The risk for Tata Motors, especially on the heels of its irrationally exuberant acquisition of Jaguar/Land Rover, is that for a huge, diversified company to enter a blue chip market with an automobile is very risky, even more so when that company intends to sell other, non-auto related products to western customers. So, as the executives at Tata Motors work on their U.S. rollout plans, they should be glued to the TV, radiowaves, and Twitterverse to figure out how Toyota, a company that Tata Motors would one day aspire to be, handled such a public and potentially company-crushing crisis.