How Tata Motors led the passenger car market

The automobile lastly hit the market final yr and Tilaknayak turned the proprietor of a punch on his birthday in December. “It is the very best birthday present I’ve ever given myself,” he says.

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gaining floor

Tilaknayak’s expertise underscores the joy that Tata Motors has entered into the Passenger Automobile (PV) market in India with its launch. Till not too long ago, the corporate’s new PVs by no means created a stir available in the market. They had been thought of to be the old style diesel automobiles that plagued the proprietor with upkeep points.

Certainly, the corporate was simply one other contender within the PV market, with a market share of simply 4.9% as not too long ago as 2020, trailing market chief Maruti Suzuki in addition to No. 2, Hyundai.

At the moment Tata Motors is rewriting that script. Whereas the PV market was rising at a modest 8-9% fee within the wake of COVID-19, the corporate was capable of greater than double the gross sales quantity. In December 2021, Tata Motors overtook its South Korean rival Hyundai to turn out to be the second largest participant within the home automobile market, with a 13% share, at a time when the latter was grappling with semiconductor shortages.

Tata Motors’ development was fueled by its sports activities utility automobiles (SUVs), which offered file numbers throughout the December quarter and topped the class. That development was led by the punch – at 5.65 lakhs (ex-showroom), the small SUV is touted because the nation’s most inexpensive utility car. In truth, lower than a yr after its launch, the Punch has turn out to be the second finest promoting passenger car of Tata Motors after the Nexon.

The corporate offered the very best variety of utility automobiles in January as nicely, however Mahindra & Mahindra overtook it by a marginal margin in February. Tata Motors continues to be the top-three participant, promoting a mean of over 10,000 models of the Nexon and Punch each month, and a mean of 4,500 models of the Harrier and Safari.

How the turnaround began

So, what’s behind this shocking change? And can Tata Motors have the ability to cowl this distance this time? In any case, it has been right here earlier than. In 2012, within the backdrop of labor unrest at Maruti Suzuki’s Manesar manufacturing unit, and because of fashions just like the Indica, the corporate was inside strolling distance of Hyundai for the No. 2 place within the PV market with a 14.2% share (Hyundai stood at 14.9% ). After which it was eclipsed by the competitors.

Between FY13 and FY18, Tata Motors noticed its market share contract sharply. Issues began solely after the launch of Tiago in April 2017. The hatchback was constructed on a brand new structure to distinguish it from the Indica-derivatives, which the corporate had been unsuccessfully launching.

In accordance with an evaluation by Elara Capital, 86 per cent of recent automobiles launched by non-Maruti Suzuki manufacturers between 2010 and 2020 had been discontinued inside 12-18 months of launch. Notable exceptions had been Tata Motors’ Nexon and Tiago and Hyundai Creta.

“You may say that Tata Motors 2.0 began from FY18. After the launch of the Tiago based mostly on a brand new design language, it was adopted by one other very profitable launch of the sub-4 meter SUV Nexon. Vivek Kumar, vice-president, JM Monetary Institutional Securities, informed Mint, with these merchandise they began taking retail buyer again, battling poor service scores, high quality points and the notion of driving Tata automobiles primarily as taxis. Occurred.

Bengaluru-based Prem Shenoy, one of many oldest Tata Motors sellers, says the 5-star crash check score from the UK-based World New Automobile Evaluation Program (GNCAP) for the Nexon in December 2018 was a primary for any automobile. The nation modified the notion of the model. “It was a gamechanger for us. We might by no means create an concept listing for a buyer, even when our merchandise had been equal to or higher than the competitors. That began to alter with the Nexon,” he says.

Kumar says: “With the Harrier and the brand new Safari constructed on the Nexon, Tata Motors has acted rapidly on suggestions, bettering its product and quickly gaining market share.”

Talking to Mint, Jai Kale, Senior Vice President, Elara Capital, says: “Tata Motors has managed to do what international OEMs couldn’t – seize clients within the hatchback house with Tiago, a stronghold of Maruti Suzuki. Is.”

At the moment, premium SUVs Harrier and Safari, and compact SUVs Punch and Nexon collectively take pleasure in over 30% share of their respective sub-segments. Tata Motors has offered 42,190 models of Punch since launch until February 2022, whereas over 3 lakh models of Nexon have been offered since September 2017.

Nonetheless, the icing on the cake was Tata Motors’ means to leapfrog into the electrical automobiles (EV) house and execute a well-deserved launch at a disruptive worth level. 4 out of 5 electrical automobiles offered within the nation in 2021 got here from Tata Steady.

SUV Push

A lot of the credit score for Tata Motors’ turnaround goes to Shailesh Chandra, managing director of the corporate’s Passenger Automobiles and Tata Passenger Electrical Mobility divisions. And far of that success is pushed by the corporate’s concentrate on SUVs, a class it’s main in India.

Launched in 1991, the three-door off-roader Tata Sierra was the primary SUV within the nation to be conceived and produced. Subsequently, Tata Motors launched extra automobiles, together with the Safari and Property, concentrating on the prosperous, upwardly dynamic Indians. The Safari got here in 1998, which was unmatched by another car of its variety. Mahindra’s Scorpio got here out a lot later in 2002.

“We had been the pioneers in SUVs from the time we launched the Safari in 1998. However there was lesser launch depth from our facet in between,” Chandra says throughout an interview with Mint at his workplace in Bombay Home. “However we noticed the SUV development coming and so we’ve constructed a portfolio that was centered round these automobiles, and on the identical time had the proper stability of all the opposite segments.”

The corporate had made it clear that any SUV section it enters should attain the highest. “We now have seven merchandise in our portfolio, all of that are among the many prime 3 of their respective segments,” says Chandra. “We’ve chosen our merchandise to satisfy a variety of various affordability factors.”

Noting that there was a marked change in choice on the client facet, Chandra says there was a push by OEMs on the provision facet as nicely. “SUVs have outperformed all different segments (with 42% of the market share) as a share of the entire business quantity. The launch depth on this section may be very excessive, whereas we now see fewer launches in typical hatches and sedans.”

A number of pillars of Tata Motors’ strategic imaginative and prescient are: well timed identification and introduction of merchandise in high-traction sub-segments of the market, concentrate on affordability, a variety of powertrain choices (CNG, petrol, diesel, electrical), revitalizing its The well being of the dealership community, aspirational styling, design and security throughout the brand new Eternally vary of merchandise, and concentrating on potential section launches.

“We’re not but current in each SUV sub-segment, however wherever we’re current, we’ve a share of over 30%,” says Chandra. He emphasised that the corporate is not going to go away any section unnoticed, together with the mid-sized SUV house. The place rivals Hyundai and Kia are sturdy gamers.

What helped clients rediscover Tata Motors was additionally a technique to focus on micro-markets the place the model was struggling. “We went to 21 cities the place we had poor market share and helped present sources to these markets,” says Chandra.

supporting sellers

Tata Motors supplier Mint mentioned Chandra and his workforce labored to streamline the dealership community and construct a robust affiliation with the model throughout the supplier group. It additionally impacts the client, who will get higher service from the supplier.

Vinkesh Gulati, President, Automotive Sellers Affiliation FADA informed Mint, “The sellers of Tata Motors are very blissful at this time. If a buyer visits a Tata Motors showroom, they may discover a product starting from base to high-end of the market. “

Tata Motors’ environment friendly dealing with of the worldwide semiconductor disaster and its capability growth prompted the corporate to extend volumes at a time when its friends had been sharply slicing manufacturing. This helped handle the sturdy buyer urge for food for private mobility with folks avoiding public transport because the Covid pandemic took a heavy toll.

The technique got here to fruition as quickly as clients began visiting the corporate’s showrooms. The corporate additionally benefited from Maruti Suzuki leaving the diesel section after the implementation of BS-VI.

Main the EV Race

The EV division, accounting for 80% of the entire EV gross sales within the nation in 2021, has been instrumental within the revival of Tata Motors. The corporate has offered a complete of round 14,000 models of its flagship Nexon EV since its launch. With the newly launched Tigor EV, Tata Motors’ whole EV gross sales grew by 478% to 2,486 models in February 2022.

The made-in-India Nexon EV, which was launched in 2020, was and can proceed to be India’s most cost-effective and best-selling electrical automobile. it’s nearly 10 lakh cheaper than another EV available in the market together with Hyundai Kona and MG ZS EV. In truth, the Nexon EV breathed new life into the IC-engined Nexon as nicely, as the electrical automobile supported the model’s visibility in new markets.

All these elements have given the corporate’s PV operations a major weighting within the firm’s inventory, after non-public fairness agency TPG Rise Local weather gave Tata Motors’ EV enterprise a valuation of $9 billion final yr. Elara Capital says the PV enterprise now accounts for 30% of the corporate’s goal worth, as in opposition to a virtually negligible worth beforehand.

challenges forward

Nonetheless, the SUV conflict is just going to accentuate and Tata Motors should do much more to keep up its lead available in the market. M&M, which has determined to re-brand as a real SUV participant, has an extended reserving pipeline for its new fashions Thar and XUV700. It’s launching a brand new Scorpio quickly, and a Bourne EV platform (a brand new EV platform for future SUVs) may even give a troublesome competitors to Tata Motors. Maruti Suzuki can be set to launch a mid-size SUV.

“Tata Motors is again within the sport, however the competitors has additionally raised the benchmark. Hyundai, Kia and M&M all are all of the sudden aggressive within the UV section with enticing launches. With restricted visibility on Tata’s future launches, it’s price contemplating whether or not their PV market share is at its peak,” says Kumar of JM Monetary.

Tata Motors says that it’s going to launch a number of SUVs within the subsequent 4-5 years.

An government of a number one OEM, who didn’t want to be recognized, admitted that Tata Motors has refreshed its presence as a consequence of its new portfolio that’s rising within the section.

“How the corporate will stack up in opposition to the competitors will turn out to be clear when all of us (automobile makers) get again to regular manufacturing. The demand pipeline for all main manufacturers appears wholesome,” he says.

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