After the disappointment of the Nano and a series of underwhelming subsequent new vehicle releases, Tata Motors seemed to lose its way. Now, thanks to the success of the Tiago small car and a record overall Indian market for new passenger vehicles in the first half of 2017, Tata is firmly on the comeback trail and has even pushed the mighty Toyota down to sixth place. But will it be able to achieve its stated goal of becoming number three by 2019?
Getting past Honda and M&M will be tough
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Tata Motors has seen its share of the Indian market slide in recent years, and even with multiple new model releases, things failed to improve. Maruti Suzuki now accounts for more than 49 per cent of the country’s passenger vehicle deliveries, which incidentally hit a new peak of 1,524,631 in the first half of CY2017. Maruti’s total was 749,448 and for the first time, not only did the brand’s share cross the magic 50 per cent mark during several months of this year but all five of the country’s best sellers were Maruti Suzukis.
How can Tata Motors possibly compete with such success? Well, Maruti’s dominance has given the home grown OEM a great goal to chase, namely bringing ever more world class models to the market and pensioning off some of its more archaic SUVs and cars. To challenge not just Suzukis but also the Hyundais, Mahindras and Hondas which outsold all Tatas in the 1 January to 30 June period, Tata Motors has had to sharpen up its marketing, dealerships and after sales, not just its cars.
Fortunately for Tata, the B segment Tiago has captured the imaginations of a new generation of Indian buyers who have looked at the brand with fresh eyes. The little car just keeps climbing up the sales charts and is the main reason for the brand’s comeback. Comprehensive numbers by model are yet to be issued for the month of July, only so-called Flash Figures. These show mixed results, with higher domestic sales offset by lower overall production.
During H1, Tata sales shot up by 22 per cent, even though the market rose by only eight per cent. The total of 75,474 compares to Hyundai’s second position of 253,428, as well as Mahinda on 112,749 and Honda with deliveries of 87,669. Toyota could manage just 61,526, which is a gain of only one per cent, so Tata has taken the Japanese brand’s former fifth position.
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By GlobalDataA massive weakness for Tata Motors is its reliance on the Tiago. Even this hatchback isn’t quite the huge success that it might seem, given that its sales total of 29,837 over the first half of the year is only good enough to place the car in twentieth position overall. Run an eye down the chart and the next best placed Tata is down in position 31 (Zest, with just 12,695 sales), followed by the Tigor (11,156 and this is the sedan version of the Tiago) in 35th place. After this, it’s the Hexa, a six-seat crossover, but it is a long way from five figures, with its deliveries numbering 5,954 units. Clearly, Tata needs more higher margin models.
TAMO
An announcement to the media in February made much of what is supposed to be a new sub-brand. TAMO, the press release evinced, “will act as an incubating centre of innovation towards new technologies, business models and partnerships in order to define future mobility solutions”. Which means…..what exactly? All the buzzwords are there and yet of hard facts, there were none. Now, there are even noises about this sub-brand having been put on the back burner, along with another big announcement, namely that Tata Motors would be collaborating with the Volkswagen Group in the Indian market. Things on the latter front have gone notably quiet.
What TAMO had been expected to produce, initially at least, was a stand-out car; something to excite buyers about the Tata brand. The company’s thinking was revealed as a vehicle concept only weeks after the media announcement at the Geneva motor show. The Racemo, a prototype sports car, could be a future production model to take on perhaps the Mazda MX-5. Tata Motors had been expected to engage a contract manufacturer to build it, possibly as soon as 2018. The scissor doors might not make production but the mid-mounted 1.2-litre turbocharged petrol engine surely could.
TAMO itself is now understood to be a kind of equivalent to Groupe Renault’s Alpine division or FCA’s Abarth, even though it has none of these makes’ heritage. Vehicles would be priced above Tata models but below Jaguars and Land Rovers. Sadly, just four months after the prototype was revealed at Geneva, Tata Motors’ management told the media that the Racemo was by no means a definite for production.
What happens to the “incubating” sub-brand now? There had also been suggestions that a car for shared mobility providers such as Ola and Uber would be added to the TAMO line-up, along with an EV. Perhaps we will hear more in the coming months. The chairman of Tata Sons, N Chandrasekaran, and several board members, are said to believe that Tata Motors should be investing its cash in cars which can more quickly turn a profit. Nonetheless, the Racemo and its Moflex architecture might still make it to production.
Profit over volume?
Not including the huge contribution from Jaguar Land Rover, Tata Motors is a major loss maker. In the financial year ending 31 March 2017, the company’s own reporting showed red ink to the tune of Rs 2,480 crore. Even worse, this was a major deterioration on the Rs 62 crore loss for fiscal 2015-2016. It isn’t just Natarajan Chandrasekaran who is preparing the group for change either: Guenter Butschek, Tata Motors’ managing director, has told employees that cost cutting is company, with this having already begun in the ranks of senior management.
What Tata Motors needs more than anything, is higher margins on its future models, something which Maruti Suzuki has already begun to achieve with certain vehicles. The process of killing off aged vehicles has at least begun, freeing up space for far more modern and hopefully more successful – both in terms of margin and sales volume – cars and SUVs. The company also needs to become far better at envisaging trends in its domestic market. The fact that Renault was able to see what it couldn’t, in the form of what has become the hugely successful Kwid A segment crossover, says it all. Now, like others, TML is rushing to develop its own vehicles for this booming segment and other, related ones.
Too many outdated small cars
When it comes to the A and B segments, Tata has an almost ridiculous number of cars. Right now isn’t the ideal time to be assessing them, due to quite a few being in the last phases of what for this company is typically long life cycles. For a long time, lots and lots of Indian customers were fine with having yesterday’s technology, or worse – hardly any modern safety tech – but that is changing rapidly.
Taking a look at how the brand’s various small cars performed during June, the most recent month for which statistics are available, underlines the point of Tata needing to create and support a small number of vehicles. The alternative, keeping ancient models coming down production lines at an ever decreasing rate, makes little sense. With that in mind, let’s see how the firm’s various A, B & B/C segment cars are doing at home.
- Nano, June sales: 167 and 1,749 in H1
- Bolt, 208 and 2,292
- Indigo & Manza, 81 and 2,409 (combined)
- Vista, 333 and 4,459
- Zest, 1,595 and 12,695
- Tigor, 2,163 and
- Tiago, 5,438 and
Some of these cars date to the early 2000s, so why are they still being manufactured? Yes, they’re cheap but Maruti is now steadily killing off its oldest vehicles and shifting its brand in line with rising incomes across much of the industrialised parts of India. This is what Hyundai, Mahindra, Honda, Toyota, Ford and also Renault are doing. Even Renault is planning to expand on its success with the super-cheap Kwid not by adding something like the Nano but instead by creating a minivan and an SUV based on the Kwid. Tata should be placing its energies into building on momentum of the Tiago and finding ways to get decent returns from this price level and the segments above it.
SUVs: more needed, now
In SUVs, there’s a good story to tell yet it likely won’t stay that way. Again, Tata’s vehicles might be rugged and reliable but are they sexy to urban-dwellers? The Safari/Storme, a ladder frame 4×4 is now more than 11 years old and fading fast. June deliveries numbered 216 and for H1, the total was 1,891. The next generation model is said to be on target for launch in late 2017.
As for the Sumo, first seen in Tata showrooms way back in 1995, its sales are holding up amazingly well. But really, what does the company think will happen to its image should it continue with such outdated vehicles? For the record, Indian buyers took delivery of 3,027 units of this SUV over the first six months, and 425 in June.
Additional models will soon be here
There must be some good news after all this negativity? Yes, there is. Quite a lot of new vehicles are on the way, and they can’t come soon enough. The first to arrive will be the production version of the X104 project. Picture above, the Nexon is about to be released as a rival for the Ford EcoSport and Hyundai Creta. More than three years ago, it was revealed as a design study with that model name at the 2014 New Delhi motor show. What was supposed to be the production version was revealed at the 2016 show and then we waited, and waited. Production started in July, and if the vehicle is as good as its appearance, Tata should have a major hit on its hands.
The Nexon will be a good support to the already on sale Hexa, another well-styled crossover SUV. Much larger than the Nexon, this six-seater replaced the Aria. Production started in December 2016 and in H1, sales amounted to 5,954 units (550 in June). This model is intended to compete in the Indian market with the Hyundai Santa Fe, Mahindra XUV500 and Ford Endeavour among others.
It isn’t hard to see some obvious gaps in the Tata Motors model range, and yet some of these have existed for years. No matter. Finally, it seems that the company is able to focus on what needs to be done, instead of wasting money on the likes of revealing prototypes of cars and SUVs at the annual Geneva motor show. That policy is to end, incidentally. For the first time in decades, Tata will not be exhibiting at the 2018 event. It must first get its home market sorted out before it thinks about expanding from the small number of European countries where it sells (a tiny number of) passenger vehicles.
What about EVs?
Turning to electrified vehicles, the expected Nano EV never did see the light of day, but now Tata has plans for a larger plug-in car. The Tiago EV is said to be close to market launch. This battery-electric small hatchback is believed to have been developed in collaboration with the UK based Tata Motors European Technical Centre (TMETC). Expect a limited production run for sales in multiple Indian cities from the fourth quarter.
Back in another part of the market, the question continues to be asked: will Tata enter the 4.3-4.5m long Compact sedan/hatchback segment with a mass volume product? The Prima, a four-door sedan concept developed for Tata Motors by Pininfarina, had its world premiere at the Geneva show in March 2009. A similarly sized model has been rumoured for years and years, though the model name would have to be different as Prima is one of Tata’s largest heavy trucks.
The new model, if it does eventuate, would use a forthcoming front- and all-wheel drive Advanced Modular Platform. This will reportedly be for vehicles from the B-segment upwards. AMP would also be used for SUVs and crossovers. Said to be known within JLR as D10, AMP is believed to be a low cost of derivative of D8, which itself was evolved from Ford’s EUCD. The likelihood of this model being something like the Toyota Corolla or Ford Focus is slim, given how small that segment of the Indian market is. Instead, Tata will probably continue to look at this size class and make its move should taxation laws, which penalise longer sedans, change.
Moving down several segments, a true rival for the Maruti Alto, India’s best selling model series, is believed to be back on a priority project. Tata Motors revealed plans for this additional small car as long ago as October 2010. Now, it will supposedly be powered by the 1.0-litre three-cylinder DiCOR diesel engine, while a petrol version is also considered likely. Originally due for launch in India during the second half of 2014, the car has been delayed until later this year.
The vehicle, variously coded as the X0, Dolphin, X451, or Pelican, will be built at the company’s Sanand plant which is severely underutilised due to the continued disappointing sales of the Nano. The new model could be based on the Nano, but larger. Its platform was originally said to be coded ‘X302’, and a development of the Nano’s X3 architecture. Other reports claim AMP will be used. Tata Motors is said to have told suppliers that it is planning to build just 2,500 units a month of this model.
There are, for now at least, no known model names for two other future vehicles. The pair will supposedly be five- and seven-seaters SUVs, both developed with the assistance of JLR engineers. Q501 and Q502 should use AMP. They should be C- and D segment front- and all-wheel drive five-door models.
Q501 could well have its world debut at the next New Delhi auto expo in January 2018. As for the longer Q502, that should be added from 2019.
Future model plan reports for other manufacturers can be viewed in the OEM product strategy summaries section of just-auto.com.
Future product program intelligence
Additional data on vehicle lifetime and future product plans, such as code names, production plants and expected annual build, are available in PLDB from QUBE.
