Moneycontrol PRO

Tata Motors MD admits to product launch delays impacting market share

"We have missed our objectives and we have not been able to live up to our expectations," Guenter Butschek, Managing Director, Tata Motors said.

May 23, 2017 / 07:55 PM IST

Posting a staggering loss of Rs 829 crore during the quarter ended March 31, 2017 Tata Motors admitted Tuesday that delay in launching of new products and upgrades cost the company dearly while failing to live up to the expectations of the management.

“We have been working consistently achieve a sustainable financial performance while delivering exciting innovation. However, we have missed our objectives and we have not been able to live up to our expectations,” Guenter Butschek, Managing Director, Tata Motors said.

The launch sequence of some of Tata Motors ace products like Tiago, Tiago AMT, Hexa and Tigor were running behind schedule to internal and external factors. Nevertheless, despite outpacing the industry growth last year on the back of new launches the Mumbai-based automaker slipped in rankings to sixth position behind Maruti Suzuki, Hyundai, Mahindra, Honda and Toyota.

“I would not like to go into details why some of the product launches were effectively late, late when talking about our plan for the year 2016-17. As a result we lost on volumes and lost market share. If you ask us if we are satisfied with our overall market performance then we are not happy. We were expecting to come out with some new products and upgrades of new products on time in passenger and commercial vehicles. There are many other misses and lost opportunities,” Butschek added.

Tiago (compact hatchback) and Tigor (compact sedan) make up 50 percent of the company’s total monthly sales. The two models which together sell around 6,500-7,000 units every month have been well received by the market. Hexa (premium SUV) sells around 1,000 units a month.


Hit by demonetisation and later by the Supreme Court verdict on ban on sale of Bharat Stage III (BS III) vehicles after April 1, 2017, the company said some of its projwcts were running behind schedule. However it is confident of launching its much-awaited compact SUV Nexon closer to Diwali this year. The Nexon will rival the Ford Ecosport and the Maruti Suzuki Vitara Brezza.

The company is nearly through with its organisational effectiveness plan which is basically a rejig of the managerial set up involving retrenchment and repositioning of employees as well as reporting pattern. This the company hopes will bring in greater agility and accountability.

Senior company executives stated that they managed to reduce head count by 10-12 percent on a base of 11,000-12,000 employees during last year. The company achieved this through offering of voluntary retirement packages which cost them Rs 67.20 crore during the quarter.

“We now have dedicated cross functional teams which actually fully own their products in terms of actual P&L (Profit and Loss). Also as far as new product development is concerned in order to make sure we don’t miss on opportunities anymore we have actually started delivering on our strategic plans,” Butschek said.

The company earlier announced plans of reducing the number of platforms it has from 6 to 2 to achieve greater efficiencies of scale.

“Its is fair to say that last year was all about getting our strategic direction in place. Now that we have all our plans in place and regain what we think is our market share it's time to deliver on these plans and therefore our focus has started to shift from strategy formulation to execution,” Butschek said.
first published: May 23, 2017 07:55 pm
ISO 27001 - BSI Assurance Mark