The financial year 2013 has been a challenging one for Tata Motors, as for others. However, despite difficult economic conditions and increasing competition, the company retained its market leadership in commercial vehicles, on the back of new offerings and introduction of innovative technologies. Its highly successful and reliable Ace and Magic vehicle models crossed the one-million sales mark achieved in just seven years since these products were introduced in the market.
Mr. Cyrus Mistry, Chairman, Tata Motors, observes: “As we look ahead, we see a year of continuing challenges, but at the same time full of opportunities. Tata Motors is privileged to have a strong parent brand, a rich commercial vehicle pedigree, international design centres of global standard, and, last but not the least, committed employees as well as a strong dealer and vendor base. With changes in the organisation structure, the company is determined to improve its customer understanding to better meet market needs and deliver products swiftly through optimised operational processes. The company has launched its Aces programme with its renewed focus on Accountability, Customer and Product Focus, Excellence and Speed”.
Building on its DNA, Tata Motors recently introduced its HORIZONEXT based on intense product focus, world-class quality and manufacturing, enriched customer purchase experience and a consistent, robust after-sales service. The company is working on a slew of new products, with its plan running up to 2020. This includes appropriate focus on alternate fuels, hybrids and electric vehicles. It is also resolved to foster a culture of customer centricity and innovation, so that its products and services really exceed customer expectations.
In the commercial vehicles segment, Tata Motors expects to remain the preferred brand for customers. Given its basic strength, it is in the best position to efficiently integrate its products and services and deliver the maximum value to its customers at the best of prices. The company continues to anticipate market demand and is well positioned to address competition with its product portfolio of global standard and an extensive dealer network.
Vehicle sales and market share
Tata Motors Group sales for the year stood at 11,91,968 vehicles, lower by six per cent as compared to the previous year. Global sales of all commercial vehicles totalled 593,897 units, while sales of passenger vehicles were at 598,071 units.
The company continues strengthening its presence in the domestic market with sales of commercial vehicles at 5,36,232 units, an all-time high, registering a growth of 1.1 per cent from the previous year. This represented a share of 59.5 per cent in the domestic CV market, mainly supported by the exceptional growth in the LCV segment.
Sales in the LCV segment continued to drive performance, growing by a 21.8 per cent during the year to 3,93,468 vehicles. The segment’s market share with 62.2 per cent expanded by 200 basis points.
Thus the company has grown and consolidated its position in the LCV segment, leading to expansion of the market share, particularly in the Ace segment where sales reached the highest-ever at over 3,25,000 units during 2012-13. In fact, the Tata Ace overall sales crossed the 10-lakh mark since the model launch.
During the year, the company also launched the ‘Tata Xenon’, a stylish and rugged pick-up, offering both single cab and dual cab versions, with best-in-class looks, operating economies and fuel efficiency.
The year also witnessed the roll-out of the two millionth truck from the company’s manufacturing facility at Jamshedpur. The plant manufactures the company’s entire range of M&HCV trucks, including the Tata Prima, both for civilian and defence applications. Also introduced were heavy trucks designed and built specifically to offer best-in-class performance, reliability and fuel efficiency, such as Tata LPT 3723, the first 5-axle rigid truck in the country in the 10×4 configuration, the Tata Prima 3138.K tipper, the Tata Prima 4938.S tractor and the Tata Prima 230 HP – LX range consisting of the Tata Prima LX 4923.S, Tata Prima LX4023.S and the Tata LPK 3118 tipper.
The year also witnessed launch of buses such as MCV buses for intercity (AC – 45 seater) and staff transportation (non-AC – 41 seater), LP/LPO Starbus Ultra with extra features and higher fuel efficiency tailored to suit Indian conditions, with the highest capacity school bus in the ICV platform in India (56 seats).
In January 2013, Tata Motors became the first company in India to introduce warranty period of four years on heavy trucks. The company introduced a telematics and fleet management service branded “Tata FleetMan”, an intelligent vehicle and driver management solution. Designed for commercial vehicle fleet owners and large consignors of goods, the service offers advanced telematics solutions which will result in improved fleet utilization and logistics and reduce track downtimes. It is also designed to address the pressing needs of the transport industry.
Through advanced telematics solutions like fuel and driver management, remote diagnostics, real time fleet tracking, SMS Alerts, Geo-fencing and trip management, Tata FleetMan combines state-of-the-art IT and telecom equipment and software, and offers one of the most advanced telematics solutions in the country.
Distribution network
Tata Motors’ sales and distribution network in India as of March 31, 2013, comprises 2,609 sales contact points for passenger and commercial vehicle businesses. The company has deployed a Customer Relations Management (CRM) system at all its dealerships and offices across the country. The system is certified by Oracle as the largest Siebel deployment in the automotive market. The combined online CRM system supports users both within the company and among the distributors in India and abroad.
In India, growth in 2013-14 is expected to come from the reach and penetration in Tier-2 and Tier-3 markets. With growing connectivity and increased rural affluence, demand for automobiles in rural areas has increased significantly. For FY 2013-14 as well, with indications of a normal monsoon and a robust growth in the agricultural sector, demand from the rural segment is likely to go up further.
With a product range catering to even the buyer of the smallest commercial vehicle or a fun-to-drive yet affordable passenger car offering, the company is appropriately placed to seize the opportunity to its advantage. Along with the product range, it is working on increasing the reach and penetration of the sales and service network to be able to serve this market better.
In 2012-13, the company increased sales touch-points by 35 per cent and service touch-points by 26 per cent. With aggressive plans for further market penetration this year, it is well set to widen the product range as well as the distribution network.
Non-cyclical business growth
In order to better insulate against the cyclicality of the automobile industry in the event of a downturn, specifically in the MHCV segment, Tata Motors has also focused on lines of business and customer solutions which are less cyclical in nature, such as spares supply and after-sales business. The spares business of the company has in fact grown by 20 per cent CAGR in the last five years.
The company is also having a greater focus on the Defence business, which is also independent of the cyclicality of the other segments in the automobile sector. While the Government has announced increased private participation in the Defence sector, little progress has been made in this direction. The company is also shifting its focus from pure logistics solutions to tactical and combat solutions, thus garnering a bigger market share.
The Defence business has greater relevance in international markets as well, and the company is also focusing now on development of this business beyond India. Exclusive Defence distributors in certain key markets such as Thailand, Malaysia, etc., have been appointed for the purpose.
Tata Daewoo Commercial Vehicle (TDCV) registered revenues of Rs. 4,017 crores, a growth of eight per cent over the previous year. The company sold 10,100 units, which is six per cent higher over the previous year.
TDCV exported 4,700 vehicles in 2012-13, the highest-ever in its history, registering a growth of 57.8 per cent as compared to 2,979 vehicles exported in the previous year. However, in the domestic market, sales declined by 17.6 per cent to 5,400 vehicles from 6,552 vehicles in the previous year, due mainly to economic slowdown.
Tata Motors Finance
The vehicle financing activity under the brand “Tata Motors Finance” (TMF) of Tata Motors Finance Ltd. (TMFL) – a wholly-owned subsidiary company – continued to show improved financial results in spite of challenging market conditions and rising costs of funds. With the company’s main focus on financing of small commercial vehicles, total disbursements for the year were at Rs. 11,180 crores, six per cent higher than Rs. 10,505 crores in the previous year.
A total of 2,51,936 vehicles were financed, representing an increase of 9.3 per cent over the previous year. Disbursals for commercial vehicles were Rs. 8,816 crores (1,81,374 vehicles) in 2012-13 compared to Rs. 7,204 crores (1,20,032 vehicles) the previous year. For passenger cars, disbursals were Rs. 2,364 crores (70,562 vehicles) in 2012-13 compared to Rs. 3,301 crores (1,10,556 vehicles) in the previous year.
The overall marketshare in terms of the Tata vehicle unit sales in India financed by Tata Motors Finance increased from 27 per cent to 33 per cent, led by a significant increase in commercial vehicle market share from 23 per cent to 34 per cent.
TMFL continued expanding its branch network and its support to the company dealership network. With a marked increase in its manpower resources as well as advanced IT technology to improve productivity and output, Tata Motor Finance has now extended its reach to over 75 per cent of the dealers. With greater attention being paid to further enhancing customer experience through its “Office of the Customer”, TMFL is confident of achieving still faster growth.