The current scenario of the Indian automotive market somewhat look like this - Maruti Suzuki is the leader, but not by the same margin from a few years ago. Hyundai is the prince who could one day be the king. And then there is a battle between homegrown players Tata Motors and Mahindra for the third spot.
Although Tata Motors is still the number 3 car maker in India, it is under constant threat from Mahindra’s streak of successful products such as the Bolero, Scorpio and XUV500. Tata Motors has recognized its Achilles heel and plans to strengthen its base by 2020.
TheEconomicTimes reports that Tata Motors is planning a major restricting exercise to become the number two automaker in India by 2020. This means that Tata Motors is planning to dethrone Hyundai in the next 7 years.
What is Tata Motors doing to get there?
ET reports that Tata Motors is strengthening its two major business units, Passenger cars and Commercial Vehicles, with a common vision statement - One Team One Vision.
The core philosophy to this new statement is coined in an abbreviation ACES which stands for Accountability, Customer and Product Focus, Excellence and Speed. Tata Motors is putting processes in place that will focus on these core values.
Apart from the ‘motivation’ aspect of the business, the company has restructured its key senior management executives for improved synergies. The changes include –
- Girish Wagh, the person behind Tata Nano and Tata Ace, is now the head of product planning.
- M Venkatram, ex employee of GM South Korea, has been brought in as the global souring head.
- Ranjit Yadav, ex country head for IT & Mobile products at Samsung India, has been poached as the new head of passenger vehicle business for Tata Motors.
What are the changes in the Passenger car business?
The automaker is leveraging its relationship with JLR by improving synergies between its four engineering centers (in India, the UK, Italy and South Korea) and integrating backend services with JLR on designing, engineering and sourcing, etc.
New and innovative products such as a compact SUV and a new small car are in the pipeline which are two years away from hitting the production lines. The automaker is also working on improving the public perception of its ultra low cost car Nano to increase sales.
What are the changes in the commercial car business?
Tata Motors is working towards improving flexibility and reducing costs so that the company can reduce the breakeven levels to 35-40 %.
Although the market is going through some tough times, the automaker believes that it will grow at a compounded annual growth rate of 10-15 % over the next 5-10 years.
Tata Motors is also working on increasing exports to Asian countries such as Bangladesh, Nepal and Sri Lanka and parts of the Middle East and the North African region and entering more global markets.
The Challenge ahead
Dethroning Hyundai is not going to be easy. The Korean automaker is growing at a breakneck pace, taking every progressive step much faster than the competition. Internationally, by the end of this decade, Hyundai looks ready to challenge the likes of BMW, Mercedes and Audi. In India, Hyundai brings a new product almost every other quarter to keep the excitement among customers. If all goes well for Hyundai, there is no reason to believe that they will come dangerously close to Maruti Suzuki in the next five years.