Tata Motors Case Study

 TO WA R D S

 N  W A  D A N E W  E S O F  U  N  E  V A G    N N  I  R O  E X P L  T Y  I T

   L L  I  B A    T T  I  F O  R  P  E  F U T U R

Background of Tata Motors Tata group of companies was founded by Jamsetji N Tata in the second half of the 19 th century, when India was still under British Rule. A vtisionary entrepreneur, an avowed nationalist and a committed philanthropist, Jamsetji Tata helped pave the path of India’s industrialisation by seeding pioneering businesses in sectors such as steel, energy, textiles and hospitality. The Tata group comprises over 100 operating companies in seven business sectors: communications and information technology, engineering, materials, services, energy, consumer products and chemicals. The group has operations in more than 80 countries across six continents, and its companies export products and services to 85 countries. Tata Motors is India’s largest automobile company, with consolidated revenues of INR 1, 88,818 crores (USD 34.7 billion) in 2012-13. It is a Fortune 500 company,with presence both in India and across the globe. Established in 1945, Tata Motors’ presence cuts across the length and breadth of India. Today, over 7.5 million Tata vehicles ply on Indian roads, since the rst truck rolled out in 1954. The company’s manufacturing base in India is spread across Jamshedpur (Jharkhand), Pune (Maharashtra), Lucknow (Uttar Pradesh), Pantnagar (Uttarakhand), Sanand (Gujarat) and Dharwad (Karnataka). It has also acquired Daewoo Commercial Vehicle Company (now Tata Daewoo) of South Korea, Hispano Carrocera of Spain, and has a joint venture with Marcopolo of Brazil for manufacturing fully built buses and coaches. In 2008 Tata Motors bought over marquee car brands Jaguar & Land Rover from Ford. Tata Motors also has a majority stake in Italian design and engineering company Trilix. It is the leader in commercial vehicles in almost all segments, and amongst the top 5 in passenger vehicles with winning products in the compact, midsize car and utility vehicle segments. It is also the world’s fourth largest truck and bus manufacturer. Tata Motors Group’s over 60,000 employees are guided by the ‘One Team One Vision’philosophy - “to be passionate in anticipating  and providing the best vehicles and experiences that excite our customers globally.” 

Evolution of Tata Motors Commercial  Vehicle (CV) Business Tata Motors commenced production in 1954 with the manufacture of medium commercial vehicles in collaboration with Mercedes Benz. The import content was slowly brought down over the years, and by the year 1969 when the collaboration ended it was almost negligible. Tata Motors had by then developed the knowhow to design its own vehicles. By the seventies the company broadened its range to include Heavy commercial vehicles with products of its own design. It went on to lead the M&HCV segment in India. Over the years Tata Motors has got into many new segments in the commercial vehicle segment and also created segments’ of its own with innovative products like the Tata Ace, Zip, Magic & Iris. It has gone on to be the market leader in almost all the segments that it operates in the commercial vehicle space.

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Global Commercial Vehicle Business (in the last 5 years) The commercial vehicle business around the world is cyclical in nature in terms of sales. Similar pattern has been seen in the last 5 years. The period between FY’ 2008-09 was particularly severe on the commercial vehicle industry with most Original Equipment Manufacturers (OEM) suffering huge setback in terms of sales. OEMs from established markets continue to face a number of challenges to maintain or grow their market position in their respective domestic markets. These include increasingly stringent regulations, rising fuel prices and largely saturated markets. The balance of power in the global commercial vehicle market has changed decisively over the past ve years. Between 2006 and 2010 Western Europe’s share in commercial vehicle market fell from 10 to 7 percent & in North America it fell from 50 to 32 percent. Market share losses of the saturated markets contrast with strong market share gains in the emerging markets. China sharply increased its global market share in 2009 by about 10 percent to 28 percent, replacing the US as the largest commercial vehicle market, largely due to governmental support initiatives. By 2010, Chinese global market share had already grown to 30 percent. India enjoyed similar although less spectacular growth. Asia is now by far the largest region for commercial vehicle sales, accounting for nearly one in two commercial vehicles sold worldwide. The commercial vehicle market will continue to grow over the coming years, with a fundamental rebalancing of the global market. The worldwide distribution of power within the commercial vehicle industry has shifted since 2006. Asian manufacturers have secured a stronger position at the expense of globalmanufacturers, such as Daimler, Volvo Trucks and Paccar, which previously dominated the heavy duty market.

Indian Commercial Vehicle Business (in the last 5 years) Road has always been the dominant mode of transport in India, accounting for around 60% of the total transport volume, in spite of them being narrow and congested with poor surface quality. Due to the long-standing history of poor quality roads and low customer expectations, Indian trucks have traditionally been technically unsophisticated and are mainly operated by owner-drivers who typically take care of their truck’s maintenance and repair themselves. Like most emerging markets, low-cost trucks dominate the Indian market. However, India has been subject to slightly stronger uctuations in terms of commercial vehicle development. One peculiarity of the Indian market structure is the high percentage of light trucks. The Indian market is largely consolidated, with a 90 percent market share split between the top 3 Indian manuf acturers.

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With the opening up of economy, India has been gradually reducing protectionist measures since the early 1990s. The automobile industry has completely opened up to foreign investments. Import regulations and customs duties no longer constitute a true barrier for completely knocked down (CKD) and completely built up (CBU) production. Big global players like Daimler & Volvo have entered into the Indian market taking advantage of this favourable investment environment. Daimler has formed a subsidiary, Daimler India Commercial Vehicles, and recently announced its own brand for the Indian market – BharatBenz. Volvo entered the luxury bus segment in 2006 and is leading player in this segment.In 2008, Volvo Trucks formed a Joint Venture (JV) with Eicher – Volvo Eicher Commercial Vehicles (VECV). Under this JV, Volvo’s heavy duty trucks are being offered in India in addition to trucks and buses already provided by Eicher. These organizations have clearly given an indication about their long term strategy for the Indian market.

 Tata Motors Commercial Vehicle Business Medium & Heavy Commercial Vehicles (M&HCV) Commercial vehicles are divided into various categories based on their usage, load capacity etc. Figure 1 gives an illustration of the basic categorization of commercial vehicles. At Tata Motors, the M&HCV product line is broadly divided under 2 categories, namely Cargo and ConsTruck ©. While Cargo line has normal load carrying trucks, ConsTruck © Range of trucks is engineered to meet the demands of the construction and mining industry. The cargo product line is further bifurcated on tonnage and has a range from 16 tons to 49 tons. Similarly the ConsTruck © range has trucks and tippers with tonnage from 16 tons to 31 tons. The various product categories of Tata Motors in M&HCV segment, with sample models is given in the Annexure – I (Figure 2)  After experiencing a volume growth of over 30% during 2009-10 and 2010-11, the buoyancy in domestic CV industry has been on a wane. The M&HCV industry bore the brunt of slowing industrial activity, weak investment sentiment and the impact of signicant eet capacity addition over the past three years, especially in the heavy-duty categories of the trucking market. Within the M&HCV segment, the contraction in demand for the higher tonnage category of trucks such as tippers, tractor trailers and multi-axle vehicles (MAVs) has been the sharpest. These factors caused M&HCV volumes to shrink by a sharp 29% Year-on-Year in FY’ 2012-13.From transporter’s viability standpoint, the current phase is characterized by reduced cargo volumes, stiff competition owing to surplus capacities (M&HCV sales doubled from the lows of FY’ 2008-09, bringing down the average age of M&HCV population to a 10 year low) and rising operating costs, especially in wake of the recent hike in diesel prices. Competitive landscape in the M&HCV industry has been changing very fast. The industry which had 2-3 major players, mostly domestic before 2005, has today seen the entry of major global players into it. Today the industry has more than 10 ‘global and Indian’ OEMs ghting it out in the market. The latest entrant into this eld is Diamler with its Indian subsidiary Daimler India Commercial Vehicle

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(DICV). Like Tata Motors it is a full range player and is expected to compete with Tata Motors in almost all segments. Globally, in all big CV markets with majority of the players competing in the market, the market leaders command only a 20 – 25% market share. Tata Motors enjoys a unique position in the M&HCV industry in this regard. It has a 62% market share in this segment. The challenge before Tata Motors is to retain the same and further enhance it, thus reversing a global trend in the Indian market.

Light & Intermediate Commercial Vehicles (L&ICV) In 1981 the Govt. allowed 4 Japanese rms –Toyota, Mitsibushi, Mazda and Nissan, to enter the Indian market for Light Commercial Vehicles through joint ventures with Indian companies and also announced its policy of ‘broad-banding’ of licenses, under which companies did not have to seek licenses for every new vehicle they wanted to manufacture. Tata Motors used this opportunity to enter into the LCV market by designing & developing its own LCV in a record 18 months, and launched the Tata 407  in 1985. It was followed up with the launch of the Tata 608 & Tata 709 in 1987. By mid-90s Tata Motors had beaten all competition to be the market leader in this segment.The vehicles made by Tata Motors were sturdier and reliable and thus better suited for the rough Indian roads. In terms of reach and spare parts availability also Tata Motors was way ahead of its competitors. This segment is broadly classied by Industry body Society of Indian Automotive Manufacturers (SIAM) into 2 categories - the Light Commercial Vehicle (LCV) segment (which has a load bearing capacity of 3.5 tons to 7.5 tons) and the Intermediate Commercial Vehicle (ICV) segment (with capacity of more than 7.5 tons to 12 tons). Figure 3 in the annexure gives a detailed breakup of the products that Tata Motors has in LCV& ICV segments. Though in FY’ 2012-13 there was a negative growth in this segment (vis-à-vis FY’ 2011-12), the industry has seen a CAGR of 13.2% over the last 5 years. Tata Motors is the undisputed market leader in the LCV segment with nearly 70% market share and has a market share of more than 42% in ICV segment. A snapshot of market share and volume in these segments for the last 5 years is given in Annexure-I (Figures 9 & 10). There are various growth drivers for this segment, the major ones being the increased demand for last mile connectivity which saw the phenomenal growth of the Tata 407   range. The improving conditions of Indian roads due to implementation of various Government schemes like ‘PradhanMantriGraminSadakYojna’ (PMGSY) has led to increased sales in this segment. Focus on improved urban infrastructure and rapid industrialization also has been a major growth driver for this industry. The competition is also growing in this segment with Indian players like Eicher, M&M, Force Motors and global players like Daimler (Bharat Benz) entering the fray. The customer preferencein this segment has seen a marked shift from being a very price sensitive market to a more performance oriented market. Factors like payload, mileage, overloading capacity etc. which used to be drivers of customer preferences have given way to factors like engine power, reliability, cabin comfort, safety etc. Increased vehicle complexities due to opening of niche applications across the country are bringing in its own share of challenges. Having catered to the

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mass market for long, Tata Motors now also faced the challenge of creating a brand image of a premium manufacturer in the L&ICV s egment. The task ahead of Tata Motors is to dominate LCV & ICV truck segment across all tonnage points and maintain protability by building a premium brand image.

Buses Tata Motors has for over fty years, continued to redene the ways in which people look at road travel in India. From building the earliest trucks that acted as goods transportation vehicles to manufacturing chassis for buses that virtually support the entire public transport network in the country, Tata Motors has always enjoyed a strong presence on Indian roads. Today Tata Motors is the world’s fourth largest bus manufacturer with the most complete range of transit vehicles that meet every need that arises in our day-to-day travel. It has continued to be the leader in this segment not just by setting technological benchmarks but also by adapting innovations effectively to suit Indian travel conditions. It manufactures a variety of premium buses and coaches that cater to the entire gamut of utility vehicles and applications, from luxurious intercity travel options to safe transport choices for school going children. While fully built buses come in a wide range from 12 seaters to 67 seaters, Chassis options vary from 4 tonneGross Vehicle Weight (GVW) (5meter length) to 16 tonne GVW (12m length). Figure 4 gives an illustration of the various segments of the busmarket and products of Tata Motors in these segments. Buses are typically divided into four categories based on their application/usage. The customer segment for buses is further divided into 3 distinct categories – the STUs (State Transport Units), Private operators, and contract operators. Figure 6 illustrates the preferences of the various customer segments mentioned above and describes the implications of these on OEMs as per an internal study. The major brands of Tata Motors are the Tata City Ride, Tata Starbus,Starbus Ultra and Tata Divo. Tata Motors has put in place an elaborate product strategy to counter its competitors in the market. The new product range has products both from Tata Motors and Marcopolo. The range of buses from Marcopolo is specically benchmarked against the best products that are currently available in the Indian market. It can offer competition to entrenched players like Volvo &Mercedes Benz in the luxury segment. Like all other areas in the commercial vehicle industry the people transport category has also moved away from its oligopolistic nature. Today the industry is crowded with a number of players both national and international. The performance of both Tata Motors and the competition (in terms of vehicles sold) in the last 6 years are given in Annexure-I (Figures 11, 12, &13). With changingcompetitive landscape, Tata Motors will face competition from both national and international players in high growth inter-urban and contract segments. In the segments of urban and semi-urban transport, expansion of MNCs is difcult due to tender-driven and regulated nature of the segments. The inter-urban transport segment is where the competition is maximum due to the high revenue, high visibility nature of the segment. This segment is most attractive for MNCs as well. The contract transport segment is witnessing mixed competition with many domestic and international players investing in this segment.

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The luxury bus segment is also witnessing a lot of competition from European and Chinese manufacturers and several new entrants are expected in the near f uture. Volvo is currently the market leader in this segment and plans to continue its dominance by introducing contemporary products in the future. Daimler has already launched 2 and 3 axle luxury coaches in India and its future plans are centered on buses and luxury coach segments. Kinglong has tied up with JCBL to sell buses in India. It has already launched its products in the urban transport market and plans to expand in India. Turkish manufacturer Temsa and Japanese Hino have also lined up their entry in the near future. The impact on Tata Motors has been manifold, due to the entry of new competitors. Tata Motors earlier foray into the luxury bus segment through its ‘Globus’ brand of buses was with mixed results. Volvo continued to be the market leader in this segment. The entry of other European players like Daimler and Temsawill result in products that rate high on parameters like safety, comfort, luxury and performance. This will pose a challenge for many Indian manufacturers. On the other hand entry of Chinese players like Kinglong will create pricing pressure for the existing players in the market offering similar features. To meet these challenges some domestic players have entered into collaboration with global manufacturers, with an intention to expand into full range manufacturing. Some of the strategic partnerships that have been forged are mentioned below. All these changes in the segment have profound implications for Tata Motors as well. 1. Ashok Leyland-Nissan – They plan to enter the light bus segment through this JV. It has already developed complete range of engine power points in heavy buses. This will be a big challenge for the existing full range players in India. 2. Volvo-Eicher – This JV is currently strong in the light bus segment, looking to expand to full range. They are moving from franchised to captive body building. Their value for money proposition is going to increase pressure on other players in the market. 3. Isuzu-Swaraj Mazda – Traditionally this JV is strong in light buses. Their JV for luxury bus segment has not had successes. This will remain a relevant competitor in light buses. 4. Volvo – It is the most strongly placed OEM currently. It is the market leader in the interurban luxury segment. It is in troducing price competitive products specic to Indian market for this segment. 5. Daimler – Daimler is making investments in Pune for captive bodybuilding of urban buses. It plans eventual transfer of bus business under Bharat Benz. Tata Motors is not the leader in inter-urban luxury segment. Its new products will target matching quality and performance of Volvo. The potential full range offering and aggressive pricing by these players is going to be challenge forexisting players in India. There are still many challenges for the growth of the bus business in India. At a macro level, the growing penetration of other mass scale public transportation (like metros, mono rails etc.) are a threat to the bus business. Entry of foreign full range players poses a big risk for domestic incumbents as they look to capture a slice of the pie of bus market share. The frequently changing regulatory

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environment also poses a risk for this business. Maintaining a dominant market share in these market conditions remained a challenge for the bus business.

Small Commercial Vehicles (SCV) and Pick-up segment Small commercial vehicle is the latest addition to the various segments of the commercial vehicle industry in India. This segment and its evolution is a perfect example of the “Blue Ocean Strategy” as enunciated by W. Chan Kim and Renee Mauborgne. This segment was completely dominated by large 3-wheeler load carriers from Bajaj, Ape, Piaggio, Force Motors etc. In 2005 Tata Motors launched the Tata Ace, a product which created an entirely new segment - the Mini Truck segment. It wiped out the large three wheeler category within a span of three years. It spawned a new segment which many followers tried to emulate in cluding 3 wheeler makers such as Piaggio, Force, Mahindra etc. Tata Motors was able to retain its market share in this segment against competing products like Mahindra Maxximo, Piaggio Porter 1000 and many more. Tata Motors was also the pioneer of the large pickup segment in India. In the mid 1990’s Tata Motors launched ‘Tatamobile’ which later was rechristened Tata 207 . The main competitor in this segment was Mahindra & Mahindra with its ‘Maxx pickup’. The product has subsequently seen substantial renement since its launch. In 2012, Tata Motors launched a new pickup the ‘Tata Xenon’. This product was well received by the market with rapid increase in sales and market share in many geographies where Tata Motors had lower share of market. The various product categories in the SCV segment (cargo & passenger) are given in Annexure –I (Figure 5). Most of the customers in these segments are rst time users / individual buyers unlike the heavier trucks which are dominated by eet owners. These products are mostly used for last mile delivery of goods. These products are tmore dependent on the consumption of goods and services and therefore have a lesser cyclical nature in comparison to heavier trucks. The key customer buying parameters for these products include - product performance, operating economics, and availability of vehicle nancing arrangements (loans). The CV market is set to experience signicant changes primarily with the use of ‘hub and spoke model’. By hub and spoke model, it is meant that the freight is generated from certain regional cluster which is then transported to various trucking centers or hubs spread across the country. These goods are furthersegregated and transported across the various spokes and nally through these spokes the goods are delivered to the end consumers. Future competition in this segment is expected from Chinese & Japanese automakers. The growth in this segment depends on the ease of vehicle nancing - loans being available to all potential customers at low rate of interest. With various products commanding different spots in the market share ladder the challenges for every different product was unique. While f or some product lines the challenge was to maintain the market share for others the challenge was to ght off competition and reach the top spot. Tata Motors being a player in almost all segments has the challenge of keeping competition at bay in all the segments and look to further grow at a faster rate and expand the market as well.

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Small Commercial Vehicle – Passenger In last few years, India has seen a spurt in passenger transportation with improvement in road infrastructure, rural to urban connectivity, urbanization, industrialization, increase in disposable income, increase in population etc. Till July 2007, only 3 Wheelers were used in Last Mile Public Transport (LMPT) movement for inter & intra city movement.

In July 2007, ‘Tata Magic’ – India’s rst 4 wheeled commercial passenger vehicle was laun ched & it changed the whole landscape of LMPT by assuring its passengers & operator better safety, better comfort, better technology, higher protability & higher status to its owner. Tata Motors has been a pioneer in creating and growing the small commercial 4 wheeler passenger market in India. LMPT industry is segmented based on a) Geography, b) Type of Usage. The segmentation as per geography is either for intra or intercity uses. Type of usage can be shared and non shared application. Tata Motors offers two products in Small Commercial Passenger Industry – Tata Magic (seating capacity 6-7 passengers) & Tata Magic Iris (seating capacity 3-4 passengers). ‘Tata Magic’ & ‘Tata Magic Iris’ are used majorly for Shared Application (both within and outside city).Tata Motors has been a pioneer in creating and growing the small commercial passenger vehicle market in India. Between the years 2007 to 2011, Large 3 Wheeler (Seating Capacity – 6 Passengers) sales dropped drastically as operators and passengers preferred 4 wheeler vehicles. Mahindra & Force Motors have signicantly scaled down manufacturing of large 3 wheelers & the market is now predominantly for 4 wheeler vehicles. However, there was still a big opportunity available within small 3-wheeler diesel market space having size of approx. 2.1 Lac units per annum which was not addressed by large 4 wheelers. To cater to this market, Tata Motors launched Tata Magic Iris in 2011 and in just one and a half years of its launch Tata Iris has received good response with volumes growing quarter by quarter across all the states with more than 40,000 Iris successfully running on roads. Indian LMPT scenario is changing rapidly with improvement in road infrastructure, urbanization, higher disposable income, industrialization, population growth etc. resulting in increase in passenger travel in intra & intercity movement. 4 wheeled vehicles are being preferred by the customers and passengers as they provide better safety to passengers/owners over 3 Wheelers. Even state transport authorities are endorsing the advantage of 4 wheelers leading to increase in the share of 4 wheelers, in a space traditionally dominated by 3 wheelers. Many 3 wheeler manufacturers have either launched their 4 wheelers or are planning to bring 4 wheelers as they see the transition from 3 to 4 wheels in future as inevitable. Going forward, majority of cities/towns are expected to allow only clean fuels like CNG/LPG vehicles for intra-city public movement. Future offerings in this segment will be from existing 3 wheeler manufacturers like Piaggio which is coming with Ape Mini passenger version, Bajaj Auto which will bring RE60 on Quadri-Cycle norms (yet not approved/implemented in India), Ashok Leyland which is coming with passenger vehicle version on their existing DOST platform. This market also has the maximum potential of growth in the near future. Can Tata Motors bring in pioneering products to further expand this market from which the whole industry would benet?

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Dealership Network Over the years Tata Motors has established the largest network of sales, services and spare parts centre for commercial vehicles in India. This network has over 200 dealers, more than 500 full range dealerships and close to 1800 touch points. One added dynamic has been the growing product line in small commercial vehicle business and therefore the need to increase the reach of the dealer network. Setting up of a full range dealer network requires a large amount of capital investment. To take products like the ‘Tata Ace’ and ‘Tata Ace Zip’ to their intended market Tata Motors has set up a large number of sales outlets in areas where there is no presence of full range dealerships. Over the years Tata Motors has been able to steadily increase the number of dealerships but in the present scenario there are various questions that the organisation is grappling with. With the steady increase in product line, product focus is slowly going down. How does Tata Motors counter this? Should the organisation continue adding full range dealerships or should it move on to a business unit wise dealership model? Viability of dealerships is extremely important to keep the network healthy. The company is also faced with the challenge of increasing the revenue per outlet which is under tremendous pressure with competitors playing with the price structure of product lines. The challengefacing Tata Motors is what would be the ideal network size and structure which will help it retain its hold over the market.

Service network and its importance In the commercial vehicle industry service network plays a great role when the customer is making a buying decision. Tata Motors has had an initial advantage as far as the reach and spread of the network is concerned. But with new players with advanced infrastructure entering the market and local players ooding the market with low cost options Tata Motors faces a tough challenge to ward of competition and improve the protability of its channel partners. Tata Motors has already implemented a lot of innovative schemes in Annual Maintenance Contract (AMC) and Extended Warranty to keep their service advantage intact. Today customers are increasingly moving towards a total life cost of ownership (TCO) approach while deciding to buy a vehicle. Therefore the service advantage will play a greater role in pre sales. Over the years Tata Motors has ingeniously brought in various product & process innovations that has helped it stay ahead of the Indian commercial vehicle market. Even after opening up of the market and a lot of foreign players entering the fray Tata Motors has still held on to its position as the market leader. In addition to the constant product innovation a lot of other initiatives have helped Tata Motors get ahead of competition.

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Special Initiatives by Tata Motors “Project Neev” Commercial Vehicle Business Unit (CVBU) has initiated and established their rural presence in a big way through “Project Neev”. Neev is currently present in the 6 states of Rajasthan, Uttar Pradesh, Bihar, Andhra, Maharashtra and Madhya Pradesh and has footprints in 238 districts, 1,798 tehsils, covering more than 150,000 villages. Approach to rural market is on the plank of self employment. Through a rigorous skill building exercise, local, unemployed rural youth have been inducted and trained to work as promoters of Tata Motors commercial vehicles, who work in their own habitations. This has become a successful inclusive growth program for the rural geographies. This program has been appreciated and recognized in various forums for innovation in rural marketing, noteworthy being recognition received from the Honorable Minister of Youth and Sports in the “Conference of Ministers of States f or Youth 12-13”

 Value Added Services For close to 60 years now, Tata Motors has been a step ahead in offering new technologies, products and value added services (VAS). Several industry rsts have been introduced by the company. Some of the latest innovations on VAS are - the 4-year warranty (partnering the customer through the lifecycle of the product). This has been designed based on the lifecycle cost study of over 15 lakh Tata trucks & tippers operating all over the country, in varied terrain and loading conditions. Another innovation on VAS front is the new premium ‘Triple Benet Insurance’ across its range of M&HCV, ICV & LCV Trucks and Tippers. This is yet another rst from Tata Motors in the Indian commercial vehicle space designed in partnership with Iffco-Tokio General Insurance Company.

Key Account Management Program Tata Motors was also a pioneer in launching the ‘Key Account Management’ program in commercial vehicle space. Even today, it is the only manufacturer in Indian CV space that has a Key Account Portal. Key account customers have multi-location branches and site ofces which make it difcult to share product and service related information to their workshop managers, drivers, operations managers etc. The key account portal offers customers several benets. Some of these are enumerated below: •

Customers can view resolution status of registered complaints through online tracking system.

•

Various analysis reports are also available for making better decisions.

•

Also the portal helps to be aware of customers’ older eet and thus TML is aware & takes action for replacement with new vehicles.

•

Customers can make online payment through portal for various services used in workshops.

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•

They also can contact various Key contact persons whose details are uploaded on the portal.

Road Ahead Tata Motors has led the Indian commercial vehicle industry for almost 6 decades now. It is a major player in almost all the segments of the industry. For the organization, every market segment brings its own set of challenges, with its unique set of customers and competitors. For example the challenges faced by M&HCV segment are completely different from those faced by SCV segment. The price points, customer prole, customer expectations etc. are completely different in each segment. Being a player which has a presence in almost all the segments of commercial vehicles, Tata Motors is thus faced with multifarious challenges (as well as opportunities). With the incoming challenge from major global players the challenges have only increased for Tata Motors.

What strategy should Tata Motors adopt to garner the best profts and market share in all segments of commercial vehicles?

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 ANNEXURE-I Figure 1- Basic Vehicle Categorization for Commercial Vehicles Based on no. of pax

Passenger

< 3.5T

3.5 to 7.5

CV Rigid

7.5T16.2T

12T16.2T

25-37 T

Goods

35 T

Tractor Trailor

40 T

49 T

Figure 2 – Product Categories in Medium & Heavy Commercial Vehicles

Rigid Truck  LPT 1613

LPT 2518

LPT 3118

LPS 3518

Prima 4028

Prima 4923

Prima 4928

LPK 1613

LPK 2518

LPK 3118

Prima 3138

 Tractor Trailer

 Tipper

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Figure 3 – Products categories in Light & Intermediate Commercial Vehicles

LCV - 4 Ton SFC 407

LPT 407

SK 407

SFC 709

LPT 709

LPT 709 HEx2

SFC 909

LPK 909

LPT 909 HEx2

LPk 909

LPT 1109

LPT 1109 HEx2

Cityride 12-20s

Tata Schoolbus

Starbus 53-64s

Divo bus

LPK 407

LCV - 7 Ton

LCV - 9 Ton

LCV - 11 Ton

Figure 4 – Product Categories in Bus Segment

LCV  Starbus 16-24s

Starbus 28-36s

Starbus 36-42s

Tata Schoolbus

1512 TC

1618 TC Bus

ICV 

MCV 

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Figure 5 – Product Categories in SCV Segment (Cargo & Passenger) Micro Trucks 2500 kg GVW

 Xenon

Tata RX pickup

Tat Magic

Tata Venture

Figure 6 - Customer Segments in Bus Industry, their Preferences & Implications of those on Customer Segments There are 3 distinct customer segments – STUs, Private Operators and Contract Operators Customer Preferences Category

Kay Purchase Criteria Relative Performance Lower

STUs and Municipal Corporations

 Acquisition Cost Operator Requirements Reliability

• Urban and sub-urban segment • Tender driven purchase process • Acquisition cost is the biggest purchase driver

Resale Value Fuel Efciency

Private Operators

Performance

• Inter-urban segment

Low cost of ownership

• Passenger comfort, safety and reliability are the key purchase drivers

Passenger Safety Requirements Ride comfort

Contract Operators • Higher re-sale value, loser operating economics (mileage, maintenance cost etc.) are the key purchase drivers

Convenience STU

Implications Higher

Private Operators

• Fleet owner catering to the premium segment also value passenger comfort, reliability and safety

Contract Operators

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Figure 7 - No. of vehicles sold by Tata Motors and competitors in SCV Cargo Segment in last 6 Years  Year

Tata Motors

Hindustan Motors

2007-08

101847

3

2008-09

89150

2009-10

 Ashok Leyland

Force Motors

Mahindra & Mahindra

Piaggio

TOTAL

0

5483

44976

4945

157254

50

0

1981

47277

9012

147470

121403

281

0

3678

76487

11094

212943

2010-11

152201

312

0

6726

105588

9124

273951

2011-12

209895

157

7593

5862

127029

10579

361115

2012-13

254257

214

34794

3335

142796

2469

437865

Figure 8  - No. of vehicles sold by Tata Motors and competitors in SCV Passenger Segment in last 6 Years  Year

Tata Motors

Force Motors

Mahindra & Mahindra

TOTAL

2007-08

11136

0

0

11136

2008-09

28659

0

0

28659

2009-10

48931

0

0

48931

2010-11

51051

237

0

51288

2011-12

60203

147

25434

85784

2012-13

94376

11

22313

116700

Figure 9 - No. of vehicles sold by Tata Motors and competitors in LCV Trucks Segment in last 6 Years  Year

Tata Motors

Ashok Leyland

Mahindra & Mahindra

Force Motors

Eicher

Swaraj Mazda

TOTAL

2007-08

19009

0

4830

902

3288

2610

30639

2008-09

17078

3

3486

1757

2404

1495

26223

2009-10

26997

0

4804

1886

3844

1802

39333

2010-11

30693

1

5449

1416

5287

1189

44035

2011-12

35293

0

5872

1464

6291

1348

50268

2012-13

26654

0

4344

1294

5082

1517

38891

15

Figure 10 - No. of vehicles sold by Tata Motors and competitors in ICV Truck Segment in last 6 Years  Year

Tata Motors

Ashok Leyland

Eicher

Swaraj Mazda

TOTAL

2007-08

19138

1774

16274

3663

40849

2008-09

13527

1271

10587

2331

27716

2009-10

21214

1502

17099

3864

43679

2010-11

25489

2810

22583

4529

55411

2011-12

32326

4169

25734

4875

67104

2012-13

24262

6477

22910

3767

57416

Figure 11 - No. of vehicles sold by Tata Motors and competitors in LCV Buses Segment in last 6 Years  Year

Tata Motors

Ashok Leyland

Eicher

Mahindra & Mahindra

Force Motors

Swaraj Mazda

TOTAL

2007-08

13317

616

1509

5284

5360

2234

28320

2008-09

11789

523

1022

2613

4027

1944

21918

2009-10

15382

812

1407

2813

5779

1835

28028

2010-11

20706

699

2484

4785

8321

3031

40026

2011-12

20976

398

3319

4456

11093

3189

43431

2012-13

20499

328

4040

2315

10926

2321

40429

Figure 12 - No. of vehicles sold by Tata Motors and competitors in ICV Buses Segment in last 6 Years  Year

Tata Motors

Ashok Leyland

Eicher

JCBL

Mahindra & Mahindra

Swaraj Mazda

TOTAL

2007-08

1417

765

1317

0

0

2090

5589

2008-09

3239

682

1225

0

0

1605

6751

2009-10

5251

1107

1726

1

0

1821

9906

2010-11

5684

1588

2318

0

0

3276

12866

2011-12

6066

2487

3091

0

84

3303

15031

2012-13

6611

3058

3253

0

79

3913

16914

16

Figure 13  - No. of vehicles sold by Tata Motors and competitors in MCV Buses Segment in last 6 Years  Year

Tata Motors

Ashok Leyland

Eicher

JCBL

Swaraj Mazda

 Volvo (incl. VBIPL)

TOTAL

2007-08

15522

16809

487

0

0

240

33058

2008-09

12203

15344

110

0

0

484

28141

2009-10

16850

15298

202

178

42

607

33177

2010-11

15014

18837

157

0

76

568

34652

2011-12

14650

18262

856

0

95

677

34540

2012-13

11315

15584

1371

0

18

601

28889

Figure 14 - No. of vehicles sold by Tata Motors and competitors in M&HCV  Trucks in last 6 Years  Year

Tata Motors

 Ashok Leyland

2007-08

129961

56061

2008-09

84705

2009-10

 AMW

Eicher

Volvo

MB India

Mahindra & Mahindra

Swaraj Mazda

TOTAL

3611

4392

823

206

32

0

195086

29796

3623

1625

913

219

6

0

120887

111822

39228

3792

2119

1006

215

0

0

158182

2010-11

145943

59863

6792

5165

1000

103

843

2

219711

2011-12

153972

56345

10021

7719

595

85

3490

3

232230

2012-13

101194

45437

6533

7517

616

0

2977

21

164295

17