Geneva: As part of its thrust to create global products, Tata Engineering is planning to manufacture cars for the European market.

Tata Group chairman Ratan Tata said, "We are evaluating different options, one of which is to have an understanding with contract-manufacturing units in Europe."" Mr. Tata added, "We need to enter foreign automobile markets and see how well we can exploit them. Mitsubishi Motors and Chrysler, which serve the US market, are good examples of what we would like to be,"

However, Mr. Tata emphasised, whatever modifications the contract manufacturers make, the final product will fall under the Tata brand. Tata Engineering has already begun negotiations with manufacturers in two countries. Mr. Tata declined to divulge the names of the companies, citing confidentiality.

On the strategy of tying up with small international players with fewer brands, Mr. Tata said, "Today, it costs about Rs. 300-400 crore for a company to launch a new car, which makes it easy for us to talk to companies with fewer products in their stable. The arrangement will benefit both sides through the launch of new products and also in seeking new markets."

Mr. Tata was hinting at hurdles in talking to big names like Toyota and Volkswagen, which offer new models every two years. However, the Tata group chairman said, "We will not give up our autonomy even if a question of equity participation comes up." He said he was not averse to a big company entering into an equity joint venture with Tata Engineering.

On the new initiatives of Tata Engineering, he said, "The company is planning to produce a car with a price tag of about Rs.1 lakh. Work on the prototype has already begun."

On the threat of a takeover, which Mr. Tata had hinted at during he annual general meeting of Telco, he said, "In case, somebody acquires a substantial stake in Tata Engineering, my business philosophy calls for working closely with him for the benefit of the company and its shareholders."

Mr. Tata said the growth of commercial vehicles was closely linked with the growth of India’s GDP. The sector had suffered due to slow economic growth, he said, adding, "I believe it will take a couple of years for the passenger-car industry to witness robust growth."