Tata Motors Company Profile Marketing Essay

Tata Motors Ltd is Indias largest automobile company. In the year 1945, Tata Motors Ltd was incorporated under the name Tata Engineering and Locomotive Co Ltd for the purpose of manufacturing locomotives and other engineering products. In the year 1991, the company launched its first indigenous passenger car, Tata Sierra and in the following year, they launched Tata Estate.

Market Leader

Tata Motors is a leading manufacturer in the commercial vehicles segment in India (5th largest in the world [1] ), and among the largest manufacturer of passenger vehicles. They are the world’s fourth largest truck manufacturer, and the world’s second largest bus manufacturer [2] . The company is involved in the process of development, designing, manufacturing, assembling and sale of vehicles, including financing, as well as post-sale services (sale of related parts and accessories). Tata Motors’ portfolio of automotive products ranges from sub-1 ton to 49 ton gross vehicle weight (GVW) trucks (including pickup trucks) and from small, medium, and large buses and coaches to passenger cars, including the car, Tata Nano.

Product Portfolio

In passenger cars segment, the portfolio of Tata Motors includes Indica, Indica Vista, Indigo, Indigo Marina and the most recently launched Nano and Manza. Post-acquisition of Jaguar, Tata Motors started production of four different vehicle lines: XK, XF, XJ and X-Type.

In addition to passenger cars, they manufacture a number of utility vehicles (UV), including the Sumo, and the sports utility vehicle (SUV), Tata Safari. In light commercial vehicles (LCV) segment (GVW of between 0.7 ton and 7.5 tons), Tata Motors is involved in the manufacturing of pickup trucks, trucks and buses. The LCV portfolio of Tata Motors also includes the Ace, the Magic (CV for passenger transportation) and the Winger. In the medium and heavy commercial vehicles (M&HCVs) segment (GVW of between 9 tons to 49 tons), Tata Motors produces trucks, dumpers, buses and multi-axled vehicles.

Manufacturing Plants

The company’s manufacturing plants are situated at Jamshedpur (Jharkhand), Pune (Maharashtra), Lucknow (Uttar Pradesh), Pantnagar (Uttarakhand), Dharwad (Karnataka) and Sanand (Gujarat). Of the six plants, three – Pune, Pantnagar and Sanand – are part of major manufacturing hubs in the country. Through their subsidiaries and associate companies, the company has operations in international locations like the UK, South Korea, Thailand and Spain. In addition to manufacturing plants at the above locations, Tata Motors set up a Research and Development Centre at Jamshedpur in 1959 and Engineering Research Centre at Pune in 1966 to provide necessary impetus to automobile research and development.


Figure 1: Location of major manufacturing hubs in India (Source: E&Y Report)

Acquisitions & Joint Ventures

Tata Motors was never new to foreign collaborations and joint ventures. There was a gradual shift in the company policy from collaborations to joint ventures and then full-fledged global acquisitions.

Early Collaborations

In as early as 1948, Tata Motors entered into collaboration with Marshall Sons (UK) for the introduction of steam road rollers. Shortly after that, in 1954, they made collaboration with Daimler Benz AG for manufacturing of medium commercial vehicles. In the year 1993, the company entered in to a joint venture agreement with Cummins Engine Co. Inc. for the manufacture of high horsepower and emission friendly diesel engines. Again in the year 1994, the company signed a joint venture agreement with Daimler – Benz / Mercedes – Benz which allowed it to manufacture Mercedes Benz passenger cars in India.

Recent Acquisitions

In the year 2004, Tata Motors acquired Daewoo Commercial Vehicle Company and renamed it as Tata Daewoo Commercial Vehicle Co. Ltd. Shortly afterwards, the new company launched its heavy duty truck ‘NOVUS’ in Korea. On June 2, 2008, the company completed its acquisition of businesses of Jaguar and Land Rover for USD 2.3 billion. Acquisition of both the business provided Tata Motors access to the development, production and sale of high-end luxury cars/SUVs. This acquisition not only gave Tata Motors complete ownership over three major manufacturing plants and two advanced design centres in UK, but also provided it with access to an established worldwide sales network. The acquisition helped Tata Motors to obtain control over various intellectual property rights (free perpetual royalty licenses), trademarks and brands.

Manufacturing: Core Values

The six major principles underlying the manufacturing processes at Tata Motors are listed as follows

Safety of men and machines.

Productivity of manufacturing lines at the highest level.

Quality of final products to be the best.

Delivery of products on time.

Produce in a Cost effective manner.

Maintaining Morale of the production workers at a manufacturing plant.

Indian Automobile Industry

The Indian automotive industry has emerged as a ‘sunrise sector’ in the Indian economy. Indian market is considered as one of the world’s fastest growing for passenger car markets and the second fastest growing industry in the country. Demographically and economically, India’s automotive industry is well-positioned for growth, servicing both domestic demand and, increasingly, export opportunities. Growing working age population, rising purchasing power and easier access to finance is expected to see four-wheelers gaining volumes. The two wheelers segment is also expected to grow on account of high demand from rural markets, the youth market and women. [1] 

Indian automobile industry is currently the 6th largest market in the world and 4th largest in Asia, after China, Japan and South Korea. By 2020, it is expected to be the 3rd largest in the world [2] after the US and China. Considered to be one of the most competitive industries with both domestic and foreign players vying for a strong market presence, the industry is also in the process of transforming itself into largest base for exports.

Industry Division

The industry is divided into following segments:

Passenger Vehicles (PV) and Utility Vehicles (UV)

Cars and Buses

Commercial Vehicles (CV)

Light CVs (LCV): Goods Carrier

Medium & Heavy CVs (M&HCV): Trucks, Tempos, etc.

Three Wheelers: Rickshaws, Delivery Vans, etc.

Two Wheelers: Scooters, Motorcycles & Mopeds

The report here would concentrate on the recent trends in the PV and CV segments where Tata Motors has a significant presence.

Passenger and Utility Vehicles

The passenger vehicle industry reported a moderate 4% growth to 2.58 lakh units in December 2012 [1] largely aided by robust demand for utility vehicles and modest increase in multi utility vehicle though lower sales of passenger car, its largest segment (75% of total passenger vehicle industry), moderated the same. The de-regulation in petrol during the first quarter of FY11 has instigated series of structural shifts in the industry. The small and compact car segment which had been the sole driver of the industry growth not so long back, have been witnessing a drop, while the bigger midsize cars and utility vehicles (UVs) were the driver for the industry growth. The key parameters like de-regulation of petrol, worker problems at Maruti Suzuki causing supply disruptions, diminishing price differentials between compact and mid-size cars and launch of affordable UVs has led to structural changes in the passenger vehicle industry during last few quarters. In addition, the growth in UV segment can also be attributed to aggressive pricing of UVs. This has greatly influenced the demand by considerably reducing the price differential between midsize sedan and small UVs. By the use of new generation of highly efficient lower power engines or through sharing of platforms with existing car model, OEMs have been able to bring down the price further. Such a fundamental structural shift in this market has led to a healthy rise in demand i.e. around 18%1 on a CAGR basis during FY10-FY12 period.

Table 1: Market shares of firms in the PV (left) and UV (right) segment (Source: Capitaline)

In both the PV and UV segments, Tata Motors has been the biggest loser in terms of market share. None of the recent launches – Nano, Manza and Aria – have lived up to their potential which has had a negative effect on its market share.

Commercial Vehicles

In the quarter ended Sep 2012, the total CV sales grew by flat 1% to 2.25 lakh units on 2% growth in domestic sales (to 2.02 lakh units) and 3% fall in exports. In half year ended September 2012, the total sales grew by 3.5% to 4.29 lakh units aided by 4% growth in domestic sales while exports remained flat [1] .

Light Commercial Vehicles

Light commercial vehicle segment continued to show a strong growth aided by strong domestic sales and export demand. The domestic sales and export recorded 16% growth each in April-September 2012 thereby leading to 16% growth in total LCV sales to 2.78 lakh units2. In this segment, Tata Motors continued to remain a market leader with 51% market share.

C:UsersPushkarDesktopMBATerm 6Manufacturing StrategyLCV.gif

Figure 2: Y-o-Y Comparison of sales in LCV segment (Source: Capitaline)

C:UsersPushkarDesktopMBATerm 6Manufacturing StrategyLCV_Mkt Share.gif

Figure 3: Market share of companies in the LCV goods carrier segment (Source: Capitaline)

Medium and Heavy Commercial Vehicles

M&HCV segment continued on a downward trend. In the quarter ended September 2012, the total sales fell by 14% on account 13% fall in domestic sales and 32% fall in exports [1] . The M&HCV industry being heavily dependent on the macro-economic environment, this decline could be attributed to high interest rates and low capital investments which aided low vehicle demands in a sluggish economy.

C:UsersPushkarDesktopMBATerm 6Manufacturing StrategyM&HCV_Sales.gif

Figure 4: Y-o-Y Comparison of sales in M&HCV segment (Source: Capitaline)

The industry leaders – Tata Motors and Ashok Leyland – reflected similar trends as the industry. For Tata Motors, the sales for the month of September 2012 reduced by 18% – 17% in domestic sales and 48% in exports. But it continued to be a market leader with 60% market share. Ashok Leyland, on other hand, saw a 12% drop in sales for the month of September 2012 on account of 6% reduction in domestic sales and 62% reduction in exports. It continued to enjoy a 25% market share (2% increase over previous year).

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