Tata Motors gets most of its revenue from its commercial vehicle division, and it accounts to almost Rs 7 out of every Rs 10 (stand-alone) in its earning. But Tata Motors has been under tremendous pressure with the continuous slump in demand for trucks and buses especially last two years. Tata lost nearly 14 percent share in the commercial vehicle space in last five years from ~60% to 44% currently. Due to strong product position from competition, Tata was shedding market share continuously and now has worked on a larger game plan to get back to Hot seat. Here are the various steps the company is taking to regain its sales. Information shared by Mr. Girish Wagh, Head, Commercial Vehicle Business Unit, Tata Motors addressing media during his interaction.
Drona’s and Acharya’s
Acharya & Drona is a mythological figure from the Hindu epic Mahabharata who was the master of advanced military arts. In order to get back some of the lost market share Tata Motors has decided to take help from Dronas and Acharyas to convince the local buyer. The Drona concept was started over a year ago, and strengthened further this year, as customer calls for support have increased after the introduction of the Bharat Stage IV emission norm in April this year, and BS IV vehicles some with some technologies and features that customers may not be familiar with. “With the BS IV technology coming in, we felt the need to add more people to respond faster,” says R T Wasan, head – marketing & sales, commercial vehicles, Tata Motors.
A Drona, according to the company, is an expert in the field of either sales, technical aspects or driver training. He can be summoned by a Tata Motors customer or dealer for any product related issue even in areas such as low fuel efficiency. If a Drona helps in simplifying technology, enhancing fuel efficiency or in the sales process, an Acharya helps in maintaining the vehicle’s health. Over 12,000 technicians have been trained to be Acharyas who can service any BS IV Tata truck or bus.
Tata is also benchmarking competition products, by tearing down their products to understand the possible areas where Tata Motors can improve its own products and also reduce costs, said Wagh. Dedicated product line-wise teams have been formed across plants to drive cost reduction. Apart from cost reduction, Wagh said the company is also working hard to improve customer satisfaction and overall cost of ownership of vehicles. To that effect, it has put in place nearly 500 mobile workshops and container workshops in remote areas across the country, promising to repair vehicles within 48 hours of breakdown.
Its also high time, Tata starts to look at rationalising its portfolio and need to work on product improvements. Currently Tata has 4 engines in 6 cylinder portfolio including the age old 697 engine. The cost and time involved in migrating these platforms to newer emission could have been utilised in developing modern power train. Like wise there are many line items, which sells very less but still they are available for sale in one location. But as a company these products consume more band width and act as speed breakers for other product development and product improvements. For instance, in case of MCV buses, if Tata has one reliable trouble free 10/11m bus chassis, it can address more than 70% requirements of MCV bus volume in private segment. But this is not happening and repeatedly only new products are launched. This leaves an impact that, there are always improvements coming on the way and Customer is simply refusing to take a buying decision and most importantly it badly affects the resale value as well.
The company plans to invest Rs 1,500 crore across all CV segments this year, and annually going forward. Simultaneously, Wagh and his team plan to keep working on strengthening existing bonds with customers. With growing aggression by other domestic and global CV makers, Tata Motors will have to work very hard to regain lost turf before building it further.
The contribution from international sales should touch 20 per cent of the company’s revenues in the coming years, he added. Currently, exports contribute 13-14 per cent of Tata Motors’ CV revenues. Wagh said the company is not only trying to regain lost market share in the domestic market but is also targeting a ramp-up in international sales.
On one hand, Tata Motors is working on strengthening ties with its customers (dealers and end customers) to enhance sales, on the other, it is taking steps to reduce costs. Wagh says that Tata Motors has worked on a modular configuration of its products. For example, 99 parts/assemblies have been changed to 52 modules. This is aimed at helping to company to also react to market demand faster.