Tata Motors aims to be No 2 by 2020: Report

Last Updated: Mon, Jan 14, 2013 19:26 hrs

Tata Motors is keen to arrest the fall in its market share, return to the growth path and reclaim the second position in the car segment in the next eight years. To improve its competitive positioning, especially in the passenger vehicle (PV) segment (which has seen a steady slide through the years), the Mumbai-based company, struggling with aging brands such as the Indica, the Sumo and the Indigo, has made multiple organisational changes.

A report by brokerage firm Motilal Oswal mentions crucial changes at Tata Motors, with an aim “to be a credible #2 player in the PV segment by 2020 and maintain market leadership in commercial vehicles”. The report was prepared after Motilal Oswal analysts met Tata Motors Managing Director Karl Slym.

In the April-December period, the company’s PV sales in the domestic market stood at 2,48,068 units, even as industry sales stood at 1.95 million units. This financial year, Tata Motors, earlier the third-largest PV entity in India, lost the position to Mahindra & Mahindra. Also, the envisaged potential for the Nano, the world’s most affordable car, remains largely untapped.

“(Karl Slym) has prepared a road map to revive the PV business by focusing on consumers, offering an exciting product portfolio, improving the quality and the overall consumer experience in sales and service. While product portfolio changes would need at least two years, the company plans to improve other aspects in this period,” said the report.

To bolster PV operations, the company had recently hired Ranjit Yadav from Samsung India and Neeraj Garg from Volkswagen India in the marketing and sales wings. The Motilal Oswal report states

M Venkatram, earlier with General Motors, Korea, has been hired to manage global sourcing. New people at the senior level would help change the poor perception of Tata Motors products and the belief that Tata Motors PVs are mostly used in fleets, impacting consumer behaviour.

The company would leverage on the parent company’s brand equity to boost product branding and restructure existing branding (if necessary) and investment in new products. This however, would take at least two years.

“Building excellence in buying and servicing process, with an objective to improve consumer perception for the products…Distribution and service network is strong, but focus is on improving dealership to enhance consumer experience in sales and service,” the report added.

The company’s commercial vehicles (CVs) business, too, is struggling, owing to falling demand and increased competition. “As the CV business is undergoing a cyclical downturn, it is focused on being prepared for an eventual recovery….Tata Motors plans to maintain its leadership by offering technologically superior products, with the lowest total cost of ownership and superior service network. It expects the medium and heavy commercial vehicle industry to record a 10-15 per cent compounded annual growth rate over the next 5-10 years, while the structural growth for LCVs (light commercial vehicles) remains intact,” the report said.

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