A ‘Slym’ Start To An Ambitious Plan

In a move towards reviving sales of passenger vehicles, Tata Motors announced an ‘aggressive customer-focused strategy’. A start to the strategy was the unveiling of 8 newly upgraded and enhanced products on the existing brands that Tata Motors functions on. The strategy would rest on the following four pillars:

1. Intense product focus
2. Focus on world-class manufacturing practices
3. Enriched customer purchase experience
4. Consistent quality of service

As a precursor to its future launches, the company unveiled several versions of its existing models of Nano, Indica, Indigo and Sumo. With this strategy, Tata Motors began its strategy that has a product portfolio planned till 2020. Also, concentrating on enhanced sales and services, it will launch improved dealerships across 150 dealers in 100 cities in the current calendar year. It will also launch 11 new service programmes over the next month.

In FY13, the sales volumes of Tata Motors have been extremely disappointing. Car sales were lower by 32% as compared to FY12 and utility vehicle sales were lower by 15%. Agreed, the industry has been facing tough times and that the dynamics have not been supportive of a favourable operational environment. But considering the fact that industry-wide passenger car and utility vehicle sales growth stood at -7% and 52.20%, respectively, there is a massive correction that Tata Motors needs to undergo.

The company’s product portfolio has 2 problems. One factor is the lack of a SUV soft-roader, a segment that boosted the growth in utility vehicles, marked by the success of Mahindra’s XUV500 and Renault’s Duster. The other problem, and a rather grave one, is the lack of freshness in Tata Motor’s product portfolio.

Since the launch of Tata Nano, which hit the markets in 2008, Tata Motors has launched just one new brand in its passenger vehicle business, the Tata Aria in 2010. Apart from this, all it has done is attempted to keep its product portfolio alive and refreshed. From 2008 to 2013, it has launched more than 20 upgrades, facelifts, new models, refreshed looks, changed interiors, enhanced functions, higher-end models and variants of the 6 brands it operates with – Nano, Indica, Indigo, Sumo, Safari and Aria.

Ultimately the market is hit with V1, V2 and Vista for the Indica, XL, CS and Manza for the Indigo and Victa, Spacia and Grande for the Sumo, among others. But the launch of a new brand sweeping the markets with excitement has been lacking, and since quite long.

Along these lines, rather than kick-starting the new strategy with a product launch, Tata Motors has come up with 8 variants on existing models. So what? It has launched more than 20 in the last 5 years and seen no springing in sales volumes. All it has managed to do is sustain volumes.

Having a portfolio set for the next 7 years definitely sounds promising. The segments that Tata Motors focuses on and the robustness of its new launches will define the success of the path that it has adopted. While that will unfold over time, the start to this programme definitely seems more tepid than it is portrayed.