Synopsis–As it looks to focus on the commercial-vehicle business, picking up someone like Marc Llistosella, former head of Daimler Trucks Asia, as CEO and managing director will help Tata Motors regain market share. He has an eye for precision, understands the Indian market well, and is a target and performance-driven person. But is Llistosella a complete package?
It’s not a first for Marc Llistosella. During his years at Daimler, the German has seen the Indian automobile industry at close quarters. So, when Tata Motors picked him as its new CEO and managing director, the reaction from industry watchers was a resounding yes.
But will Llistosella, who joins a long list of expat CEOs (three of them before him) Tata Motors has had, be any different from his predecessors? Can he win back what’s lost in one of the world’s fastest-growing automobile markets?
To understand, let’s hit the rewind button first.
In March 2010, when Daimler was setting up its base in India, it invited a group of journalists for the unveiling and experience drive of its newly-laid test-track at Oragadam near Chennai. It was the first time that a commercial-vehicle (CV) manufacturer had set up such an advanced track in India.
It had almost everything — a water trough, variegated surfaces, and testing gradients including a cobbled surface. Plant construction was yet to begin. So, on the open ground at the site, an adjoining small but furnished structure doubled up as the venue for individual interactions with Llistosella, then managing director and CEO of the company’s Indian arm.
That was the first one-on-one interaction this correspondent had with him. He was polite yet clear that Daimler trucks with their sophisticated German technology were superior to those available in the Indian market back then. He was equally confident about Daimler making significant inroads into India.
He did succeed in laying a strong foundation for Daimler in India, and after a five-year stint when he moved to Tokyo to take up a bigger role, he had left behind a growing company in the hands of his successor groomed internally.
Llistosella was the head of Daimler Trucks Asia and CEO of Mitsubishi Fuso Truck and Bus Corporation till 2018, holding charge of both the Bharat Benz and Fuso global businesses with the India head reporting to him.
Another short interaction this reporter had with him was in September 2017, when he was present at Daimler India’s BS-V truck display in Chennai. He was a trifle quieter back then though with the same resolve.
A German with a Spanish origin, Llistosella (pronounced in Spanish as Llisto-say-a), will succeed Guenter Butschek, also a German.
Butschek’s tenure ends in June.
Is Llistosella the perfect choice for the top job? Before we get there, let’s first understand what he is getting on his plate.
Tata Motors under Butschek
Over the years, Tata Motors has made concerted efforts to grow its global footprint, first through exports and later through acquisitions of companies like Daewoo Commercial Trucks and JLR.
What Tata Motors is looking for at this stage of its journey is to infuse firepower into its CV business and turn it around. Though the CV segment still contributes a chunk to the company’s sales volumes, it has been facing declining market share over the last 10 years from a near monopoly.
New players have grabbed a share of its pie. At one point of time, Tata Motors held around 70% market share in CVs. It came down to 50.23% in 2013-14, and in FY20 its market share stood at 42.33%. It clocked a market share of 40% in FY21 till January.
Immediately after taking over, Butschek had announced a restructuring plan to make the company more nimble and agile. This plan involved realigning and bifurcating various verticals. The CV business was the first to witness the change. The focus was on re ducing costs, growing sales, and removing supply-chain bottlenecks. Voluntary retirement schemes have also helped make the company leaner and more efficient.
Butschek’s effects started showing up in 2017-18 numbers, as sales started going north. But now the time has come for the CV business to play a bigger role.
It’s time to build on the foundation that Butschek has laid and get the organisation ready for the next 20-30 years. “This may require collaborations with global players or even selling some stake,” says Puneet Gupta, director, automotive forecasting at IHS Markit. For this, a leader with a global vision and knowledge of new technologies will be required.
Llistosella fits the bill. One of his last responsibilities was as a board member of a Swedish transport company called Einride. A Google check shows that the company specialises in automated and self-driving as well as electric-vehicle technology for logistics and shipping carriers.
This experience should come in handy at Tata Motors.
A hard taskmaster with love for precision
Tata Motors always placed a lot of confidence in the capabilities of expats, with a predilection for Germans. They have always been considered a step ahead of others due to their technical and engineering know-how, sharp eye for quality, and work discipline.
Avik Chattopadhyay, co-founder of Expereal India, says he does not see Llistosella as a German but a non-Indian to head the company. “Merely coincidental that most of them are Germans,” he says.
“Guess it is to bring in people with strong global automotive engineering and business backgrounds. Also, if the brand has ambitions to go global, then an ‘acceptable fair face’ works better at opening doors and opportunities,” he adds.
Tata Motors needs someone like him to overhaul the entire CV business and bring out higher-quality products. In medium and heavy products, the Indian CV maker needs to be more proactive.
“The old company has some embedded problems and for weeding them out, it needs someone who is very tough yet at the same time knows the product and market very well,” says the dealer quoted earlier.
The former colleague quoted earlier says that at the annual dealers meet, Llistosella would recognise outstanding performance. The bottom line of the work culture was constant reviews based on an annual plan with focus on finances and bigger targets. “He was pretty good at it,” he adds.
With a long list of positives, is Llistosella a complete package? Not quite.
Lacks passenger-car experience
While Llistosella’s vast experience at the Daimler Group revolves around CVs, he also spent some years at Mercedes-Benz AG in dealer development and in sales for vans along with light-duty commercial vehicles. But he was never involved in the hardcore passenger-car business.
Will that be a predicament?
“The core principles of both commercial and passenger vehicles are similar and there is a very capable team that will surely be able to support him well in Tata Motors,” says Arora of Mondriaan Group.
“That said, the journey forward for Tata Motors is fraught with challenges and severe competition. Being able to transform this mammoth and diverse organisation and catapult it into the next-gen nimble and agile customer-centric corporation is the need of the hour. Marc will need to draw upon every experience and learning to do this effectively,” he adds.
The former colleague quoted earlier says fundamentals of all automotive segments remain the same while customer nuances may differ. Though Llistosella has never been part of cars directly, the Daimler management is always built around Mercedes-Benz cars, trucks, and buses. The topics of discussions revolve around markets, dealers, and suppliers and sometimes even management is common.
Butschek has already done a great job in turning around the passenger-vehicle business and spinning it off as a separate subsidiary. Sales have also started picking up, as the company is developing new model platforms and also expanding its electric bouquet. The carmaker has been raising the bar on the safety and quality fronts. This has catapulted it to the third position in the passenger-vehicle pecking order in FY21 after dropping to the fifth slot behind Mahindra & Mahindra and Kia Motors.
Today, as the government is pushing for new motor regulations and policies, the new production-linked incentive scheme will also open up newer opportunities for Tata Motors to export. There are multiple areas where the German can contribute, explains Gupta from IHS Markit.
The bottom line
Clearly, Tata Motors is looking to focus on its commercial-vehicle business going forward. A lot will depend on how Llistosella is able to blend his experience of working with global giants like Daimler and Mitsubishi Fuso and drive innovation not only in terms of products and processes, but also on organisation and network management fronts, since this market is likely to see significant disruption in the coming times, says Arora of Mondriaan Group.
Chattopadhyay of Expereal believes that Llistosella’s stint at Mitsubishi Fuso was to set things right and he needs to do the same at Tata Motors now. He is known as one who takes tough strategic calls, many times challenging the holy cows of the existing business. “He needs to do the same in his new role… challenge convention and restructure the commercial-vehicle business,” he adds.
Just as Butschek was needed five years ago, Tata Motors now needs Llistosella. Let the journey begin.
(Graphics by Mohammad Arshad)