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UGC SPONSORED NATIONAL CONFERENCE

Recent Advances In Accounting And Finance

January 28,2012

Organized By

Department Of Commerce And Business Administration Saurashtra University, Rajkot

Title Of The Paper

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ABSTRACT

Objective of Research is to analyze the marketing strategy used by TATA Motors Ltd as compared to other firms in the Commercial Vehicle Industry for sale of buses as per application / usage. Commercial Vehicle Business Unit (CVBU) is Cash Cow for TATA Motors Ltd. TATA Motors is the only company in the Indian Commercial Vehicle (CV) Industry which has the products presence in each segment from Small Commercial Vehicles to Medium & Heavy Commercial vehicle which includes (SCV, LCV, ICV, MCV, and HCV). Competitors are having products only in specific segments like Mahindra & Mahindra in Indian CV Industry is known for School Buses & Ashok Leyland is having expertise in Medium & Heavy commercial Trucks & Buses. So as the product segment changes, company changes in Industry & every company

has its own marketing strategy. In this project I’ll analysis how different companies make

different strategies in CV industry as compared to TATA Motors Ltd. What are benefits to TATA Motors for being a big company & what are drawbacks of being big in the market place.

As an enterprise under India’s largest multi-holding company, Tata Motors has grown significantly in the past 65 years since its establishment in 1945. The company caters to three main market segments globally: the passenger cars, utility vehicles and commercial vehicles. A significant breakthrough for the company was the development and commercialization of the truly Indian cars - Tata Indica and Tata Indigo. The company produced the first mini-truck, first

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light and first heavy vehicle and many more firsts in India, being an innovator in their industry. It has followed a strategy of acquisitions and joint ventures in its mid-stage and launched new products at a rapid pace in different market segments. Today, Tata Motors enjoys the position of

being India’s leading automobile manufacturer with increasing presence in Europe, South East

Asia, Africa, Australia and the Middle East with a total income of US $4 billion in 2004-05.

The company focuses on providing customers the best value for their money and meets European standards and environmental regulations through their advanced technologies.

INTRODUCTION

More than half a century of impressive presence and Tata Motors continues to provide India with top of the line commercial vehicles. Tata Motors is India's largest and among the world's top five medium and heavy commercial manufacturers.

We have over 130 models providing a wide variety of commercial transport solutions. A vehicle for every application - you name it we have it! From 2 ton LCVs to 40 ton tractor trailers and buses that can seat 16 people to as many as 67. From Tippers to Special Purpose Vehicles, to 6x4 and 4x4 off road vehicles and Defence vehicles - we cover the entire gamut!

Tata Motors Limited is an Indian multinational automotive corporation headquartered in Mumbai, India. Part of the Tata Group, it was formerly known as TELCO (TATA Engineering and Locomotive Company). Its products include passenger cars, trucks, vans and coaches.

Tata Motors is South Asia’s largest automobile company; it is the leader in commercial vehicles and among the top three in passenger vehicles. Worldwide it is the world's fourth-largest truck manufacturer and second-largest bus manufacturer. [3] It has auto manufacturing and assembly plants in Jamshedpur, Pantnagar, Lucknow, Sanand, Dharwad and Pune, India, as well as in Argentina, South Africa, Thailand and the United Kingdom. Tata Motors has produced and sold over 4 million vehicles in India since 1954. [4]

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Tata Motors Commercial Vehicles:

The wide array commercial vehicles from Tata motors are designed to take care of almost every

business needs, big and small. From rigid trucks to tractor trailers, from light commercial vehicles to specialized defence carriers, from luxury buses to compact city carriers.

Medium and Heavy Vehicles:

Light Vehicles:

Rigid Trucks

Rigid Trucks

Tractor Trailers

Tippers

Tippers

Small Vehicles:

Buses:

Ace Winger

Xenon

Public Transport Intercity Transportation

207 DI EX

Charter Buses

Telcoline

Industry Dynamics & Competition

TATA Motors is having highest market share in each segment. Year on year sale of vehicles is

increasing but Market share is fluctuating. From Oligopoly market CV industry in India will become a prefect competition market. As many of Indian companies are now entering into the market place with JV with foreign experts in CV. Mahindra & Mahindra is coming up with Navistar (Mahindra Navistar in India) for Heavy CV. Ashok Leylend is coming up with Nissan

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for Light Commercial Vehicles (LCV) . Similarly other player niche players of world CV markets are coming up in Indian market like Volvo, Mercedes Benz & Scania. Now the time Indian market place is very demanding, there is extreme demand for AC Buses & construction equipments for building better infrastructure for India. The scope of the project will be the

strategies adopted by the local companies & by the world CV experts in the global market. We ll benchmark the Trends in the Global CV Industry, the marketing /channel strategies these companies adopt. How these companies will meet the local requirement of India customers. How govt is helping Indian CV industry which itself create an all together different marketing strategy / channel.

The Indian majors control majority of the market share with TATA motors enjoying major share of that in both cargo and passenger vehicle with a share of 64%. TATA, Ashok Leyland and Mahindra & Mahindra together control over 84% share. Over last 5 years, the CV market has seen global majors entering India eyeing to taste this huge potential. A lot of consolidations, JVs have taken place to position them in India, ASEAN market.

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Global Challenges in the Automotive Industry 6
Global Challenges in the Automotive Industry 6

Global Challenges in the Automotive Industry

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Opportunities: 1) Global markets getting stagnant, while China, India and Thiland driving double digit growth 2)

Opportunities:

1) Global markets getting stagnant, while China, India and Thiland driving double digit growth 2) Indian GDP targeted at 8-9.5% growth in coming years leading to the need for massive infrastructure movement 3) India does not have a clearly defined scrap policy for old vehicles. So far the small operators have been pushing the old vehicles on road to maintain their bottom-line. However this fleet needs to be replaced with better technology vehicles with better load capacity and less maintenance 4) India Retail, logistic, distribution sectors getting organized creating opportunity for CV market to split in to further more segments 5) Easy financial options. Most of the vehicle makers now have a strategic relationship with bankers and also their own financial units for easy credit.

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Assessment of Overall direction Commercial Vehicle Business Unit (CVBU) is Cash Cow for TATA Motors Ltd

Assessment of Overall direction

Commercial Vehicle Business Unit (CVBU) is Cash Cow for TATA Motors Ltd. TATA Motors is the only company in the Indian Commercial Vehicle (CV) Industry which has the products presence in each segment from Small Commercial Vehicles to Medium & Heavy Commercial vehicle which includes (SCV, LCV, ICV, MCV, and HCV). Competitors are having products only in specific segments like Mahindra & Mahindra in Indian CV Industry is known

for School Buses & Ashok Leyland is having expertise in Medium & Heavy commercial Trucks & Buses. So as the product segment changes, company changes in Industry & every company

has its own marketing strategy. In this project I’ll analysis how different companies make

different strategies in CV industry as compared to TATA Motors Ltd.

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Porters Five Force Analysis for TATA Motors:

  • 1. Marketing Channel: TATA Motors being a big company the process of appointment a

dealership at the remote places is a very difficult process, as investment on the dealership is very high. As in case of Mahindra & Force Motors investment cost is less & they have dealerships in every district place, which help then to get the rural market coverage. M&M has got a market share of 31% in 4 ton Bus market.

  • 2. Large Product Range: TATA Motors is having a large product range of vehicles, due to the

same supply chain of the products become tedious & time consuming. Products are made on order with the delivery commitment of at least 3 months. Whether in case of Swaraj Mazda, they can do customisation within 10 days as the range of products is very less. Most of the mobile homes are set up in Swaraj mazda Buses only.

  • 3. Price Competition: TATA Motors have to face a price competition with products of other

companies which have low qualities. First time user / captive customer who are unknown to the

products & industry will get into the trap of these low cost options.

  • 4. Changing Scenario of Industry: From Oligopoly market CV industry in India will become a

prefect competition market. As many of Indian companies are now entering into the market place with JV with foreign experts in CV. Mahindra & Mahindra is coming up with Navistar (Mahindra Navistar in India) for Heavy CV. Ashok Leylend is coming up with Nissan for Light Commercial Vehicles (LCV). Similarly other player niche players of world CV markets are coming up in Indian market like Volvo, Mercedes Benz & Scania.

  • 5. Upgrading Products: As in the changing scenario the needs of people are changing at very

fast pace. Now the time Indian market place is very demanding, there is extreme demand for AC Buses & construction equipments for building better infrastructure for India. The company which come up with the customer satisfaction will be the market leader. For that TATA Motors need to understand the market dynamics

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Suggestions for adopting the Strategy according to the Segmentation

  • 1. TATA Motors should increase the dealerships / channel partners for the rural marketing. In

case of non viability should force the old dealerships to open a branch & increase the market

share in that market.

  • 2. Large range of products is increasing the gap b/w supply & demand. TATA Motors should

standardize the products. Product should be available at the time of demand, sales & marketing should be pro active & should plan before the demand by estimations.

  • 3. After sales service not satisfactory: Almost every customer complained of the unsatisfactory

after sales service being provided by the service stations of the company. Either these people do

not deliver the vehicle on time or they hesitate to provide on-route service. This type of behaviour causes a feeling of being ignored inside the customers mind. On the other hand, Customers are very satisfied with the after sales service being offered by Ashok Leyland. Leyland is very good in providing On-Route service which is very important for customer satisfaction. TATA Motors should make 24X7 service point one in each district.

  • 4. Territory Infringement: division of the territories of the dealership is not properly done and

also the company does not take any action against the practice of territory infringement. Hence it becomes difficult for some dealers to manage the customers in their territory and also it de- motivates them. This affects the sales of the product in a major way. The Territory Infringement should imposed on dealership strongly.

  • 5. Lack of spare parts: certain bus fleet operators complained of paucity of spare parts with the

sales office. The spare parts how so ever small they may be were not available at certain times which led to the loss of revenue being generated by the bus on daily basis.

  • 6. Non- availability of product: Bus fleet operators are not getting delivery of the product asked

by them because of the non-availability of the products with the dealer. In that case after waiting

for some time customers moved to competitor’s product. This comes as a cause of major concern

because the actual sales of that particular product suffered leading to loss of revenue for the organizatio

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CONCLUSION

Tata Motors aimed to increase its presence worldwide. In 2004, it acquired the Daewoo Commercial Vehicle Company of South Korea. The reasons behind the acquisition were:

Company's global plans to reduce domestic exposure. The domestic commercial vehicle market is highly cyclical in nature and prone to fluctuations in the domestic economy. Tata Motors has a high domestic exposure of ~94% in the MHCV segment and ~84% in the light commercial vehicle (LCV) segment. Since the domestic commercial vehicle

sales of the company are at the mercy of the structural economic factors, it is increasingly looking at the international markets. The company plans to diversify into various markets across the world in both MHCV as well as LCV segments. To expand the product portfolio Tata Motors recently introduced the 25MT GVW Tata

Novus from Daewoo’s (South Korea) (TDCV) platform. Tata plans to leverage on the

strong presence of TDCV in the heavy-tonnage range and introduce products in India at an appropriate time. This was mainly to cater to the international market and also to cater to the domestic market where a major improvement in the Road infrastructure was done

Tata remains India's largest heavy commercial vehicle manufacturer and Tata Daewoo is the 2nd largest heavy commercial vehicle manufacturer in South Korea. Tata Motors has jointly worked with Tata Daewoo to develop trucks such as Novus and World Truck and buses namely, GloBus and StarBus.

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REFERENCES