As Tata Motors gears up to unveil its compact sports utility vehicle Nexon, it will be looking to further strengthen its presence in the passenger vehicle segment after two fairly successful launches this calendar. The mass market Nexon is pitted against the Ford Ecosport, Maruti Suzuki’s runaway-hit Brezza and Mahindra KUV100.
Tata’s premium SUV offering Hexa, launched in January, got a decent response and is selling around 500 units every month.
The compact sedan Tigor which competes against the Dzire have been selling around 2800 units every month since its launch in March.
Tata cars perception has improved dramatically since the launch of its compact hatchback Tiago in March last year. But, it will be a hard battle ahead, as car makers ply prospective buyers with an array of offerings.
So far this calendar, there have been 19 launches — 7 new model launches, 10 upgrades and 2 variants — by 10 car makers.
Nevertheless, Tata Motors’ long term goal of getting into the top three in the passenger vehicles segment looks credible at this point. That is a far cry from situation less than two years back when many were wondering if Tata should be in the car business at all.
A decade back, Tata Motors had an enviable market share of over 16 percent, and was third in the pecking order after Maruti Suzuki and Hyundai.
But things steadily began going downhill as the company was unable to replicate the success of Indica. New launches such as Zest, Bolt, Indigo CS, Nano (updated), Sumo Grande and Safari Storme failed to cut ice with buyers and by 2015-16, Tata Motors’ market share had wilted to 5 percent.
A fresh start
When he took charge as CEO and Managing Director of the company in February last year, one of Guenter Butschek’s priorities was to change the market perception about Tata Motors cars. It was not viewed as an aspirational brand, and its models were thought to be unexciting.
The launch of Tiago was the first big step towards winning the perception battle.
“The Zica (now Tiago) is where it all started,” said a Tata Motors executive who is part of the engineering research centre.
“That’s when the push from the top bosses was such that we realized that it’s a make or break moment for us. If the model fails then it is time for ‘wrap up’, if it does well then we continue,” the executive said.
With its catchy price tag of Rs 3.54 lakh the five-seater compact hatchback Tiago targeted the white space just above the entry level A segment but below the B segment. This is where Hyundai grossed volumes with the Santro and i10 before they were discontinued.
The model delivered and how! Tiago today accounts for 38 percent of Tata Motors’ monthly sales and is becoming the most successful Tata product in recent years.
This was followed by the Tigor – a compact sedan based on the Tiago – and pitted against Dzire, the best-selling compact sedan from Maruti Suzuki. Tata Motors priced Tigot at Rs 4.7 lakh, well below the Rs 5.35 price tag of Dzire. The gamble paid-off.
Both models have sent Tata Motors sales charts soaring. At 22.5 percent, the company’s car sales grew at nearly double the rate compared to the industry which grew by 11.7 percent by end of May, as per SIAM data.
And the perception about the brand appears to be improving, judging from the buyer profile: majority of buyers of the Tigor are under 30.
Revving up
From an average of around 7,000-8,000 units a month Tata’s volumes have grown to 12,000 units a month thanks to the new launches. Enquiries and walk-ins, as per dealers, has been the best in the last six months.
A long time Tata Motors dealer said, “The new products are doing well and the marketing and promotional activity has been equally supportive. There have been drastic changes in the way Tata Motors is doing its business, the whole approach is very different. We are not totally happy with the sales numbers currently but they are definitely better than last year. We are confident of a turnaround in operations”.
Tata Motors sales grew 15 percent last year to 1.72 lakh as against 1.49 lakh sold in 2015-16, as per data supplied by the Society of Indian Automobile Manufacturers. Its market share closed at 5.66 percent last year up marginally from 5.35 percent clocked in 2015-16.
Besides Nexon, also in the works is a premium hatchback pitted against the Maruti Suzuki Baleno and Hyundai i20. Unlike its predecessors this new car will not look like a derivative of any existing model but will instead be a ground up new design using a new platform.
Further, a new premium SUV rivalling the Toyota Fortuner and Ford Endeavour will make its way to Tata showrooms next year. This new SUV uses the platform on which the current Range Rover Discovery Sport is built.
..and slimming down
To get better economies of scale and agility, Tata Motors is on course to reduce number of platforms to two from six presently. These modern platforms can take the form of any vehicle structure as so demanded by the market. These can be compact hatchback, sedan, compact sedan, SUV, multi-purpose vehicle or multi-utility vehicle.
“We will be in each of the exiting segment and also in segments which have not even been created yet,” said Pareek in an earlier interaction with Moneycontrol.
This also means curtains for some of older generation models like the Nano, Indica, Indigo to name a few. These low volume models will most likely not be upgraded to meet the upcoming, cost-intensive crash test and safety norms and the strict emission norms.
Service..with a smile
A closer look at the reasons behind the slide in Tata Motors market share, besides the slow pace of new products roll out, was its service quality. The company was caught in a vicious cycle. With lackluster sales, dealer partners were not keen to upgrade service standards which in turn led customers to keep away from Tata cars.
Sales at showrooms is the first point of contact with the customer, but after sales is where there are repeated interactions with the customer.
“When I joined the company there were at least 50 new unread mails in my inbox every morning all of which complained about the shoddy service experience,” said a top Tata Motors executive.
“If he is disappointed in service, he is disappointed in the brand”, the executive added.
Maruti Suzuki, the country’s top car manufacturer, runs a network of workshops which at 2000 is more than three times the size of Tata Motors. Yet, the Delhi-based carmaker has consistently topped J D Power’s Service Index for more than a decade.
The team led by Mayank Pareek, the sales and service veteran from Maruti Suzuki, has set course to change this. Armed with new products Tata Motors has overhauled its service network, to take the challenge to the doorstep of the market leader.
From reducing the average waiting time on a car brought in for servicing to deploying mobile service vans in large cities and rural hinterlands to taking the service process details completely online, Tata Motors has bent her back on this.
Dinesh Bhasin, head customer support, passenger vehicle business unit, Tata Motors said: “About 85 percent of the time a Tata car gets serviced within 48 hours. We are working to bring it down to 24 hours. On expansion front, we are right now 630 touch points. We would be adding 200 more this year and by 2019, it will be 1500.”
The results are showing on the JD Power rankings, which is known for its in-depth survey across the world. In 2015, Tata Motors was tied fourth alongside Hyundai with 849 points based on a 1000 point scale. Leader Maruti Suzuki topped with 906 points during that year. Last year, Tata Motors jumped two spots to finish at 888 points tied again with the Korean car brand at the second spot.
As part of the exercise many of Tata Motors’ senior executives visit the company showrooms incognito to check on service standards. They later submit their experience with the company and suggest areas of improvement.
“The number of ‘complaint’ mails I get every day is now down to less than four and my target is to make that zero,” added the executive mentioned earlier.
The cars of tomorrow
With an eye on future, Tata Motors joined hands with Microsoft to generate connected mobility solutions using internet of things, artificial intelligence and machine learning technologies all aimed at making driving a stress-free and enjoyable experience.
Given that an average person spends four hours each day (or nearly 60 days in a year) commuting in his car, manufacturers are working overtime on a host of innovative technologies.
Speaking to Moneycontrol Timothy Leverton, President and Head, Advanced and Product Engineering, Tata Motors said: "Besides other things, we are working on the voice control (technology) and being able to develop effective solutions for voice controls which can make use of all the languages in India. It could be about how you access digital systems."
To tap into the technology revolution, Tata Motors has formed a start-up like unit, which though rests within the company, is independent in operations. This agile, ring-fenced unit formed under the brand TaMo takes its own decisions. A senior company official put it as ‘a breeding ground for new ideas’.
This new unit which sources ideas from a team based in the Silicon Valley showcased its maiden product at the Geneva Motor Show in March this year. Focusing on low volume, low investment TaMo intends to stay a step ahead of mother Tata Motors technologically. TaMo showcased a two-seater sports car Racemo which does 0-100kmph in under 6 seconds. Further, it has joined hands with Jayem Automotives for development of special performance vehicles based on the latest series of products.
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