Tata Motors’ Big Split: Why Tata Motors Is Reorganizing Its Auto Empire?

Tata Motors Limited (TML), a $29 billion global automobile manufacturer, stands as one of India’s most trusted names in mobility. With operations spanning 125 countries and a network of over 9,400 touchpoints, Tata Motors is deeply embedded in markets across the world, consistently delivering value to its customers.

As of March 2023, the company’s structure includes 90 consolidated subsidiaries, two joint operations, four joint ventures, and 11 equity-accounted associates. Tata Motors is believed to drive India’s mobility transition with smarter, safer, and more integrated vehicle solutions. It is India’s #1 commercial vehicle (CV) manufacturer and the leading electric vehicle (EV) brand, offering a comprehensive product portfolio under:

• Tata Commercial Vehicles (CV): India’s largest CV range, supporting cargo and passenger mobility.
• Tata Passenger Vehicles (PV + EV): Known for design, safety, and leading the electrification journey with an EV market share of over 55%.
• Jaguar Land Rover (JLR): A premium portfolio of iconic brands, Range Rover, Defender, Discovery, and Jaguar, crafted for the modern luxury segment.

Financial Picture:

Financially, Tata Motors recorded a revenue of ₹4,39,695 crore in FY2025, marking a new all-time high. The sectoral contribution in this was as follows:

Business Segment	Revenue Share	Share in Total Revenue	Sales Volume (units)
Commercial Vehicles	₹75,055 crore	17%	3,84,704
Passenger Vehicles	₹48,445 crore	11%	5,56,367
Electric Vehicles	₹8,187 crore	~1.86%	64,269
Jaguar Land Rover	~₹3,08,008 crore (£28,961 million)	~ 71%	4,00,898

In FY2025, the company’s revenue from domestic sales reached ₹1,18,630 crore, marking an ROCE of 17.6%. Additionally, the EBITDA of ₹57,649 crore and PBT (before exceptional items) of ₹34,330 crore positioned the company to become a net debt-free entity by FY2025. 

In FY2025, the company also approved the plan for the demerger of its business into two distinct listed entities: Tata Motors Passenger Vehicles Limited (TMLPV) and Tata Motors Commercial Vehicles (TMLCV). The move is designed to enable each business to operate independently, with dedicated strategies tailored to its respective market segments and growth priorities.

Tata Motors Passenger Vehicles Limited (TMLPV)

TMLPV will house the entire passenger vehicles business, which includes:

• Internal Combustion Engine (ICE) passenger vehicles and SUVs
• Electric vehicles (EVs)
• Jaguar Land Rover (JLR)

TMLPV will remain a listed company. The existing passenger vehicle business (TMPV) will be merged into Tata Motors Limited, which will then be renamed as Tata Motors Passenger Vehicles Limited. For this, the strategic focus will be as follows:

1. EV and Smart Technology: Continued investment in electric mobility and connected car technologies to drive product innovation.
2. JLR Global Expansion: Scaling JLR’s presence in international markets with a strong focus on electrification as part of its “Reimagine Strategy.”
3. Advanced R&D: Increased investment in autonomous, connected, and AI-enabled vehicle technologies.
4. Capital and Partnerships: Independent access to capital and partnerships aligned with the company’s growth in EVs and premium mobility solutions.

Tata Motors Commercial Vehicles (TMLCV):

TMLCV will focus exclusively on the commercial vehicle segment, including trucks, buses, and related services. This entity will also be listed separately. The strategic focus here would be as follows:

• Market Leadership: Continued efforts to maintain leadership in the commercial vehicle segment with improvements in product mix and customer service.
• EV Adoption: Investment in electric buses and trucks, supported by progress in smart city mobility deployments.
• Digital Solutions: Expansion of digital sales channels and fleet management systems to enhance customer experience.
• Segment Performance: Addressing underperformance in the small CV and pickup segments through targeted strategies.

Why Is Tata Motors Demerging?

1. Greater Focus & Strategic Clarity

Tata Motors’ commercial vehicles (CV) and passenger vehicles (PV, including EVs and JLR) operate in very different markets, with different strategies, capital needs, and growth paths. Splitting them allows each to focus better, act faster, and execute more effectively.

2. Unlocking True Value

By separating the businesses, investors can value each segment on its own strengths: CV for its focus on the industrial cycle, and PV/EV/JLR for its tech-driven growth. In a combined structure, this clarity is often lost, leading to what is called a “conglomerate discount.”

3. Tailored Strategies & Faster Decisions

Each entity can now build its own strategy: CVs can focus on operational efficiency and fleet tech, while PVs can double down on electrification, luxury, and AI. This improves decision-making speed and long-term competitiveness.

4. Capital Efficiency

CV and PV businesses have very different investment needs. The demerger lets each raise funds independently and deploy capital based on its specific goals, without internal competition for resources.

5. Built on Existing Independence

Since 2021, Tata Motors’ CV, PV+EV, and JLR units have already been operating with separate CEOs. The demerger formalizes this setup and gives each more autonomy to grow.

6. Tech-Driven Future

Each new company can now adopt AI, automation, and advanced tech in ways that suit its market. For example, PVs can focus on autonomous driving, while CVs can build AI for logistics and fleet optimization.

Implications Of Demerger:

Post the announcement, Tata Motors gained nearly 4% and as of the latest trend, the share price reached an intraday high of ₹729.35 as of 26th May 2025.

As a part of the demerger structure, the composite scheme of arrangement will result in the following:

1. Shareholders will receive one share of TMLCV for every one share of Tata Motors Limited, with a face value of ₹ 2.
2. Shareholders will continue to hold their existing shares in the renamed TMLPV, resulting in mirror shareholding in both entities.

This “mirror shareholding” means your ownership is split between the two companies, but the total value should remain roughly the same, based on market pricing. So, say you have 1000 shares of Tata Motors now. After the demerger, you will have 1000 shares each in TMLCV and TMLPV.

Additionally, the asset division is expected to follow an approximate 60:40 ratio, with the commercial vehicle business retaining the larger share, reflecting its higher capital requirements and manufacturing footprint. Both entities will function with focused management teams, clearer strategic priorities, and the autonomy to pursue growth independently.

(source: Business Standard, Annual Report, and Financial Express)

As a shareholder, your current Tata Motors holding will split into mirror shareholdings in Tata Motors Passenger Vehicles (TMLPV) and Tata Motors Commercial Vehicles (TMLCV)—one share each for every share held. As the demerger enables each business to operate independently with focused strategies, distinct capital plans, and dedicated leadership, it is estimated to benefit stakeholders in all aspects.

This structure aims to enhance operational clarity and provide investors with better visibility into the performance and potential of each segment. However, given that the entire process takes months to finalize, it is tough to estimate its exact implications on the market and the share price of both the original entity and the demerged entity in the future. Therefore, ensure that you continue to track market parameters, company fundamentals, and industry trends before finalizing your investment decision regarding Tata Motors’ shares. 

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