Tata Motors to remain sharply focused on high-growth segments of the market | Business Standard News

Clipped from: https://www.business-standard.com/article/automobile/tata-motors-to-remain-sharply-focused-on-high-growth-segments-of-the-market-121070400579_1.html

Encouraged by turnaround in passenger vehicle business in terms of volumes, market share and brand recall, the firm is no longer in a hurry to forge JV or enter technical tie-ups

Tata Motors, which has firmly re-established itself in the No.3 slot in India’s competitive passenger vehicle market, will remain sharply focused in high growth segments of the automobile market that have helped the firm command a high market share even with a relatively smaller portfolio of models, the company’s top official said.

Encouraged by the turnaround in the passenger vehicle business in terms of volumes, market share and brand recall, the Tata Group flagship is no longer been in a hurry to forge joint ventures or enter technical collaborations the past couple of years, Shailesh Chandra, President, passenger vehicle business unit at Motors said.

“Our focus will be to present in those parts of the industry where there is growth and scale. That is how we have selected the products carefully in our portfolio so that we are ready to ride the wave of the growth,” said Chandra.

For this reason, Tata Motors has been able to command a higher market share even with fewer models compared to players that are below it with more products, he added. “It’s a more efficient portfolio,” he said.

With the current range, including Tiago, Tigor, Safari, Nexon and Harrier, Tata Motors addresses 63 per cent of the automobile market in India. Chandra said with the launch of the Hornbill, a subcompact SUV that will be positioned below the Nexon and is expected to go on sale later this fiscal, the firm will be able to cover a wide spectrum of the market.

Over the last three years, under the turnaround plan, Tata Motors has pulled the plug on various old and underperforming platforms and models that had fallen out of favour. The move has paid off.

In the year ended March 31, 2021, the company’s passenger vehicles rose 69 per cent over FY20 to an eight-year high of 222,638 units. In the same period the broader passenger vehicle market in India declined 2 per cent. Its marketshare jumped to 8.2 per cent from 4.8 per cent.

The maker of Harrier and Nexon models has been riding high despite a challenging market condition precipitated by the pandemic and the marketshare gains continues for the firm. In the Q1 of the current fiscal it has touched 10 per cent.

Besides the new Forever range, the strong operational performance of the PV business was led by the so-called “Re-imagining projects” which among other things included a strong emphasis on phygital (combination of offline and online sales strategy) and retail-focused approach.

The phygital strategy encompassed everything from use of the augmented reality to demonstrate a product and features, adopting a micro market approach to creating a hyperlocal marketing network. It was initiated in the beginning of this year and now close to 893 dealers can be traced through Google my business. As a result, the search for Tata Motors went up to 132 last year to 693 this year in FY21.

All the initiatives on the digital front have given the company a lot of traction. The number of visitors on the company’s website soared to 37.8 million in FY21, up 77 per cent year-on-year. It has also improved the brand’s ranking to No 2 in terms of the top of the mind awareness, claimed Chandra.

Tata Motors’ refreshed product portfolio has aided rapid recovery in the PV business and market share gains; it is back on track to achieve FCF (free cashflow breakeven) by FY23, wrote Jinesh Gandhi, in a recent research report.

Owing to Covid related disruptions Chandra estimates passenger vehicle volumes (dispatches to dealers) to have dropped 35 per cent to around 600,000 units in Q1 of FY22 from 930,000 in Q4 of FY21. He expects recovery this time around, to be slower as compared to the first wave of the pandemic.

Auto firms have started to replenish channel inventory across categories as enquiries and retail demand improves on receding Covid-19 cases and easing of lockdowns. Overcoming the challenges in production planning, companies have been able to push dispatches on pent-up demand expectations. However, the increased vehicle prices (up ~3-8 per cent across segments since Jan’21) and higher fuel costs may dampen consumer sentiment in entry level segments, ICICI Securities’ Nishant Vyass wrote in a research note on July 2.

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