N W A D W E AN

Y T I L I B A T I F O R P E R U T U F
F O S E U N E V A G EXPLORIN

TOWARDS

Background of Tata Motors

Tata group of companies was founded by Jamsetji N Tata in the second half of the 19th century, when India was still under British Rule. A vtisionary entrepreneur, an avowed nationalist and a committed philanthropist, Jamsetji Tata helped pave the path of Indias industrialisation by seeding pioneering businesses in sectors such as steel, energy, textiles and hospitality. The Tata group comprises over 100 operating companies in seven business sectors: communications and information technology, engineering, materials, services, energy, consumer products and chemicals. The group has operations in more than 80 countries across six continents, and its companies export products and services to 85 countries. Tata Motors is Indias largest automobile company, with consolidated revenues of INR 1, 88,818 crores (USD 34.7 billion) in 2012-13. It is a Fortune 500 company,with presence both in India and across the globe. Established in 1945, Tata Motors presence cuts across the length and breadth of India. Today, over 7.5 million Tata vehicles ply on Indian roads, since the first truck rolled out in 1954. The companys manufacturing base in India is spread across Jamshedpur (Jharkhand), Pune (Maharashtra), Lucknow (Uttar Pradesh), Pantnagar (Uttarakhand), Sanand (Gujarat) and Dharwad (Karnataka). It has also acquired Daewoo Commercial Vehicle Company (now Tata Daewoo) of South Korea, Hispano Carrocera of Spain, and has a joint venture with Marcopolo of Brazil for manufacturing fully built buses and coaches. In 2008 Tata Motors bought over marquee car brands Jaguar & Land Rover from Ford. Tata Motors also has a majority stake in Italian design and engineering company Trilix. It is the leader in commercial vehicles in almost all segments, and amongst the top 5 in passenger vehicles with winning products in the compact, midsize car and utility vehicle segments. It is also the worlds fourth largest truck and bus manufacturer. Tata Motors Groups over 60,000 employees are guided by the One Team One Visionphilosophy - to be passionate in anticipating and providing the best vehicles and experiences that excite our customers globally.

Evolution of Tata Motors Commercial Vehicle (CV) Business

Tata Motors commenced production in 1954 with the manufacture of medium commercial vehicles in collaboration with Mercedes Benz. The import content was slowly brought down over the years, and by the year 1969 when the collaboration ended it was almost negligible. Tata Motors had by then developed the knowhow to design its own vehicles. By the seventies the company broadened its range to include Heavy commercial vehicles with products of its own design. It went on to lead the M&HCV segment in India. Over the years Tata Motors has got into many new segments in the commercial vehicle segment and also created segments of its own with innovative products like the Tata Ace, Zip, Magic & Iris. It has gone on to be the market leader in almost all the segments that it operates in the commercial vehicle space.

Global Commercial Vehicle Business (in the last 5 years)

The commercial vehicle business around the world is cyclical in nature in terms of sales. Similar pattern has been seen in the last 5 years. The period between FY 2008-09 was particularly severe on the commercial vehicle industry with most Original Equipment Manufacturers (OEM) suffering huge setback in terms of sales. OEMs from established markets continue to face a number of challenges to maintain or grow their market position in their respective domestic markets. These include increasingly stringent regulations, rising fuel prices and largely saturated markets. The balance of power in the global commercial vehicle market has changed decisively over the past five years. Between 2006 and 2010 Western Europes share in commercial vehicle market fell from 10 to 7 percent & in North America it fell from 50 to 32 percent. Market share losses of the saturated markets contrast with strong market share gains in the emerging markets. China sharply increased its global market share in 2009 by about 10 percent to 28 percent, replacing the US as the largest commercial vehicle market, largely due to governmental support initiatives. By 2010, Chinese global market share had already grown to 30 percent. India enjoyed similar although less spectacular growth. Asia is now by far the largest region for commercial vehicle sales, accounting for nearly one in two commercial vehicles sold worldwide. The commercial vehicle market will continue to grow over the coming years, with a fundamental rebalancing of the global market. The worldwide distribution of power within the commercial vehicle industry has shifted since 2006. Asian manufacturers have secured a stronger position at the expense of globalmanufacturers, such as Daimler, Volvo Trucks and Paccar, which previously dominated the heavy duty market.

Indian Commercial Vehicle Business (in the last 5 years)

Road has always been the dominant mode of transport in India, accounting for around 60% of the total transport volume, in spite of them being narrow and congested with poor surface quality. Due to the long-standing history of poor quality roads and low customer expectations, Indian trucks have traditionally been technically unsophisticated and are mainly operated by owner-drivers who typically take care of their trucks maintenance and repair themselves. Like most emerging markets, low-cost trucks dominate the Indian market. However, India has been subject to slightly stronger fluctuations in terms of commercial vehicle development. One peculiarity of the Indian market structure is the high percentage of light trucks. The Indian market is largely consolidated, with a 90 percent market share split between the top 3 Indian manufacturers.

With the opening up of economy, India has been gradually reducing protectionist measures since the early 1990s. The automobile industry has completely opened up to foreign investments. Import regulations and customs duties no longer constitute a true barrier for completely knocked down (CKD) and completely built up (CBU) production. Big global players like Daimler & Volvo have entered into the Indian market taking advantage of this favourable investment environment. Daimler has formed a subsidiary, Daimler India Commercial Vehicles, and recently announced its own brand for the Indian market BharatBenz. Volvo entered the luxury bus segment in 2006 and is leading player in this segment.In 2008, Volvo Trucks formed a Joint Venture (JV) with Eicher Volvo Eicher Commercial Vehicles (VECV). Under this JV, Volvos heavy duty trucks are being offered in India in addition to trucks and buses already provided by Eicher. These organizations have clearly given an indication about their long term strategy for the Indian market.

Tata Motors Commercial Vehicle Business

Medium & Heavy Commercial Vehicles (M&HCV)
Commercial vehicles are divided into various categories based on their usage, load capacity etc. Figure 1 gives an illustration of the basic categorization of commercial vehicles. At Tata Motors, the M&HCV product line is broadly divided under 2 categories, namely Cargo and ConsTruck. While Cargo line has normal load carrying trucks, ConsTruck Range of trucks is engineered to meet the demands of the construction and mining industry. The cargo product line is further bifurcated on tonnage and has a range from 16 tons to 49 tons. Similarly the ConsTruck range has trucks and tippers with tonnage from 16 tons to 31 tons. The various product categories of Tata Motors in M&HCV segment, with sample models is given in the Annexure I (Figure 2) After experiencing a volume growth of over 30% during 2009-10 and 2010-11, the buoyancy in domestic CV industry has been on a wane. The M&HCV industry bore the brunt of slowing industrial activity, weak investment sentiment and the impact of significant fleet capacity addition over the past three years, especially in the heavy-duty categories of the trucking market. Within the M&HCV segment, the contraction in demand for the higher tonnage category of trucks such as tippers, tractor trailers and multi-axle vehicles (MAVs) has been the sharpest. These factors caused M&HCV volumes to shrink by a sharp 29% Year-on-Year in FY 2012-13.From transporters viability standpoint, the current phase is characterized by reduced cargo volumes, stiff competition owing to surplus capacities (M&HCV sales doubled from the lows of FY 2008-09, bringing down the average age of M&HCV population to a 10 year low) and rising operating costs, especially in wake of the recent hike in diesel prices. Competitive landscape in the M&HCV industry has been changing very fast. The industry which had 2-3 major players, mostly domestic before 2005, has today seen the entry of major global players into it. Today the industry has more than 10 global and Indian OEMs fighting it out in the market. The latest entrant into this field is Diamler with its Indian subsidiary Daimler India Commercial Vehicle

(DICV). Like Tata Motors it is a full range player and is expected to compete with Tata Motors in almost all segments. Globally, in all big CV markets with majority of the players competing in the market, the market leaders command only a 20 25% market share. Tata Motors enjoys a unique position in the M&HCV industry in this regard. It has a 62% market share in this segment. The challenge before Tata Motors is to retain the same and further enhance it, thus reversing a global trend in the Indian market.

Light & Intermediate Commercial Vehicles (L&ICV)

In 1981 the Govt. allowed 4 Japanese firms Toyota, Mitsibushi, Mazda and Nissan, to enter the Indian market for Light Commercial Vehicles through joint ventures with Indian companies and also announced its policy of broad-banding of licenses, under which companies did not have to seek licenses for every new vehicle they wanted to manufacture. Tata Motors used this opportunity to enter into the LCV market by designing & developing its own LCV in a record 18 months, and launched the Tata 407 in 1985. It was followed up with the launch of the Tata 608 & Tata 709 in 1987. By mid-90s Tata Motors had beaten all competition to be the market leader in this segment.The vehicles made by Tata Motors were sturdier and reliable and thus better suited for the rough Indian roads. In terms of reach and spare parts availability also Tata Motors was way ahead of its competitors. This segment is broadly classified by Industry body Society of Indian Automotive Manufacturers (SIAM) into 2 categories - the Light Commercial Vehicle (LCV) segment (which has a load bearing capacity of 3.5 tons to 7.5 tons) and the Intermediate Commercial Vehicle (ICV) segment (with capacity of more than 7.5 tons to 12 tons). Figure 3 in the annexure gives a detailed breakup of the products that Tata Motors has in LCV& ICV segments. Though in FY 2012-13 there was a negative growth in this segment (vis--vis FY 2011-12), the industry has seen a CAGR of 13.2% over the last 5 years. Tata Motors is the undisputed market leader in the LCV segment with nearly 70% market share and has a market share of more than 42% in ICV segment. A snapshot of market share and volume in these segments for the last 5 years is given in Annexure-I (Figures 9 & 10). There are various growth drivers for this segment, the major ones being the increased demand for last mile connectivity which saw the phenomenal growth of the Tata 407 range. The improving conditions of Indian roads due to implementation of various Government schemes like PradhanMantriGraminSadakYojna (PMGSY) has led to increased sales in this segment. Focus on improved urban infrastructure and rapid industrialization also has been a major growth driver for this industry. The competition is also growing in this segment with Indian players like Eicher, M&M, Force Motors and global players like Daimler (Bharat Benz) entering the fray. The customer preferencein this segment has seen a marked shift from being a very price sensitive market to a more performance oriented market. Factors like payload, mileage, overloading capacity etc. which used to be drivers of customer preferences have given way to factors like engine power, reliability, cabin comfort, safety etc. Increased vehicle complexities due to opening of niche applications across the country are bringing in its own share of challenges. Having catered to the

mass market for long, Tata Motors now also faced the challenge of creating a brand image of a premium manufacturer in the L&ICV segment. The task ahead of Tata Motors is to dominate LCV & ICV truck segment across all tonnage points and maintain profitability by building a premium brand image.

Buses
Tata Motors has for over fifty years, continued to redefine the ways in which people look at road travel in India. From building the earliest trucks that acted as goods transportation vehicles to manufacturing chassis for buses that virtually support the entire public transport network in the country, Tata Motors has always enjoyed a strong presence on Indian roads. Today Tata Motors is the worlds fourth largest bus manufacturer with the most complete range of transit vehicles that meet every need that arises in our day-to-day travel. It has continued to be the leader in this segment not just by setting technological benchmarks but also by adapting innovations effectively to suit Indian travel conditions. It manufactures a variety of premium buses and coaches that cater to the entire gamut of utility vehicles and applications, from luxurious intercity travel options to safe transport choices for school going children. While fully built buses come in a wide range from 12 seaters to 67 seaters, Chassis options vary from 4 tonneGross Vehicle Weight (GVW) (5meter length) to 16 tonne GVW (12m length). Figure 4 gives an illustration of the various segments of the busmarket and products of Tata Motors in these segments. Buses are typically divided into four categories based on their application/usage. The customer segment for buses is further divided into 3 distinct categories the STUs (State Transport Units), Private operators, and contract operators. Figure 6 illustrates the preferences of the various customer segments mentioned above and describes the implications of these on OEMs as per an internal study. The major brands of Tata Motors are the Tata City Ride, Tata Starbus,Starbus Ultra and Tata Divo. Tata Motors has put in place an elaborate product strategy to counter its competitors in the market. The new product range has products both from Tata Motors and Marcopolo. The range of buses from Marcopolo is specifically benchmarked against the best products that are currently available in the Indian market. It can offer competition to entrenched players like Volvo &Mercedes Benz in the luxury segment. Like all other areas in the commercial vehicle industry the people transport category has also moved away from its oligopolistic nature. Today the industry is crowded with a number of players both national and international. The performance of both Tata Motors and the competition (in terms of vehicles sold) in the last 6 years are given in Annexure-I (Figures 11, 12, &13). With changingcompetitive landscape, Tata Motors will face competition from both national and international players in high growth inter-urban and contract segments. In the segments of urban and semi-urban transport, expansion of MNCs is difficult due to tender-driven and regulated nature of the segments. The inter-urban transport segment is where the competition is maximum due to the high revenue, high visibility nature of the segment. This segment is most attractive for MNCs as well. The contract transport segment is witnessing mixed competition with many domestic and international players investing in this segment.

The luxury bus segment is also witnessing a lot of competition from European and Chinese manufacturers and several new entrants are expected in the near future. Volvo is currently the market leader in this segment and plans to continue its dominance by introducing contemporary products in the future. Daimler has already launched 2 and 3 axle luxury coaches in India and its future plans are centered on buses and luxury coach segments. Kinglong has tied up with JCBL to sell buses in India. It has already launched its products in the urban transport market and plans to expand in India. Turkish manufacturer Temsa and Japanese Hino have also lined up their entry in the near future. The impact on Tata Motors has been manifold, due to the entry of new competitors. Tata Motors earlier foray into the luxury bus segment through its Globus brand of buses was with mixed results. Volvo continued to be the market leader in this segment. The entry of other European players like Daimler and Temsawill result in products that rate high on parameters like safety, comfort, luxury and performance. This will pose a challenge for many Indian manufacturers. On the other hand entry of Chinese players like Kinglong will create pricing pressure for the existing players in the market offering similar features. To meet these challenges some domestic players have entered into collaboration with global manufacturers, with an intention to expand into full range manufacturing. Some of the strategic partnerships that have been forged are mentioned below. All these changes in the segment have profound implications for Tata Motors as well. 1. Ashok Leyland-Nissan They plan to enter the light bus segment through this JV. It has already developed complete range of engine power points in heavy buses. This will be a big challenge for the existing full range players in India. 2. Volvo-Eicher This JV is currently strong in the light bus segment, looking to expand to full range. They are moving from franchised to captive body building. Their value for money proposition is going to increase pressure on other players in the market. 3. Isuzu-Swaraj Mazda Traditionally this JV is strong in light buses. Their JV for luxury bus segment has not had successes. This will remain a relevant competitor in light buses. 4. Volvo It is the most strongly placed OEM currently. It is the market leader in the interurban luxury segment. It is introducing price competitive products specific to Indian market for this segment. 5. Daimler Daimler is making investments in Pune for captive bodybuilding of urban buses. It plans eventual transfer of bus business under Bharat Benz. Tata Motors is not the leader in inter-urban luxury segment. Its new products will target matching quality and performance of Volvo. The potential full range offering and aggressive pricing by these players is going to be challenge forexisting players in India. There are still many challenges for the growth of the bus business in India. At a macro level, the growing penetration of other mass scale public transportation (like metros, mono rails etc.) are a threat to the bus business. Entry of foreign full range players poses a big risk for domestic incumbents as they look to capture a slice of the pie of bus market share. The frequently changing regulatory

environment also poses a risk for this business. Maintaining a dominant market share in these market conditions remained a challenge for the bus business.

Small Commercial Vehicles (SCV) and Pick-up segment

Small commercial vehicle is the latest addition to the various segments of the commercial vehicle industry in India. This segment and its evolution is a perfect example of the Blue Ocean Strategy as enunciated by W. Chan Kim and Renee Mauborgne. This segment was completely dominated by large 3-wheeler load carriers from Bajaj, Ape, Piaggio, Force Motors etc. In 2005 Tata Motors launched the Tata Ace, a product which created an entirely new segment - the Mini Truck segment. It wiped out the large three wheeler category within a span of three years. It spawned a new segment which many followers tried to emulate including 3 wheeler makers such as Piaggio, Force, Mahindra etc. Tata Motors was able to retain its market share in this segment against competing products like Mahindra Maxximo, Piaggio Porter 1000 and many more. Tata Motors was also the pioneer of the large pickup segment in India. In the mid 1990s Tata Motors launched Tatamobile which later was rechristened Tata 207. The main competitor in this segment was Mahindra & Mahindra with its Maxx pickup. The product has subsequently seen substantial refinement since its launch. In 2012, Tata Motors launched a new pickup the Tata Xenon. This product was well received by the market with rapid increase in sales and market share in many geographies where Tata Motors had lower share of market. The various product categories in the SCV segment (cargo & passenger) are given in Annexure I (Figure 5). Most of the customers in these segments are first time users / individual buyers unlike the heavier trucks which are dominated by fleet owners. These products are mostly used for last mile delivery of goods. These products are tmore dependent on the consumption of goods and services and therefore have a lesser cyclical nature in comparison to heavier trucks. The key customer buying parameters for these products include - product performance, operating economics, and availability of vehicle financing arrangements (loans). The CV market is set to experience significant changes primarily with the use of hub and spoke model. By hub and spoke model, it is meant that the freight is generated from certain regional cluster which is then transported to various trucking centers or hubs spread across the country. These goods are furthersegregated and transported across the various spokes and finally through these spokes the goods are delivered to the end consumers. Future competition in this segment is expected from Chinese & Japanese automakers. The growth in this segment depends on the ease of vehicle financing - loans being available to all potential customers at low rate of interest. With various products commanding different spots in the market share ladder the challenges for every different product was unique. While for some product lines the challenge was to maintain the market share for others the challenge was to fight off competition and reach the top spot. Tata Motors being a player in almost all segments has the challenge of keeping competition at bay in all the segments and look to further grow at a faster rate and expand the market as well.

Small Commercial Vehicle Passenger

In last few years, India has seen a spurt in passenger transportation with improvement in road infrastructure, rural to urban connectivity, urbanization, industrialization, increase in disposable income, increase in population etc. Till July 2007, only 3 Wheelers were used in Last Mile Public Transport (LMPT) movement for inter & intra city movement. In July 2007, Tata Magic Indias first 4 wheeled commercial passenger vehicle was launched & it changed the whole landscape of LMPT by assuring its passengers & operator better safety, better comfort, better technology, higher profitability & higher status to its owner. Tata Motors has been a pioneer in creating and growing the small commercial 4 wheeler passenger market in India. LMPT industry is segmented based on a) Geography, b) Type of Usage. The segmentation as per geography is either for intra or intercity uses. Type of usage can be shared and non shared application. Tata Motors offers two products in Small Commercial Passenger Industry Tata Magic (seating capacity 6-7 passengers) & Tata Magic Iris (seating capacity 3-4 passengers). Tata Magic & Tata Magic Iris are used majorly for Shared Application (both within and outside city).Tata Motors has been a pioneer in creating and growing the small commercial passenger vehicle market in India. Between the years 2007 to 2011, Large 3 Wheeler (Seating Capacity 6 Passengers) sales dropped drastically as operators and passengers preferred 4 wheeler vehicles. Mahindra & Force Motors have significantly scaled down manufacturing of large 3 wheelers & the market is now predominantly for 4 wheeler vehicles. However, there was still a big opportunity available within small 3-wheeler diesel market space having size of approx. 2.1 Lac units per annum which was not addressed by large 4 wheelers. To cater to this market, Tata Motors launched Tata Magic Iris in 2011 and in just one and a half years of its launch Tata Iris has received good response with volumes growing quarter by quarter across all the states with more than 40,000 Iris successfully running on roads. Indian LMPT scenario is changing rapidly with improvement in road infrastructure, urbanization, higher disposable income, industrialization, population growth etc. resulting in increase in passenger travel in intra & intercity movement. 4 wheeled vehicles are being preferred by the customers and passengers as they provide better safety to passengers/owners over 3 Wheelers. Even state transport authorities are endorsing the advantage of 4 wheelers leading to increase in the share of 4 wheelers, in a space traditionally dominated by 3 wheelers. Many 3 wheeler manufacturers have either launched their 4 wheelers or are planning to bring 4 wheelers as they see the transition from 3 to 4 wheels in future as inevitable. Going forward, majority of cities/towns are expected to allow only clean fuels like CNG/LPG vehicles for intra-city public movement. Future offerings in this segment will be from existing 3 wheeler manufacturers like Piaggio which is coming with Ape Mini passenger version, Bajaj Auto which will bring RE60 on Quadri-Cycle norms (yet not approved/implemented in India), Ashok Leyland which is coming with passenger vehicle version on their existing DOST platform. This market also has the maximum potential of growth in the near future. Can Tata Motors bring in pioneering products to further expand this market from which the whole industry would benefit?

Dealership Network
Over the years Tata Motors has established the largest network of sales, services and spare parts centre for commercial vehicles in India. This network has over 200 dealers, more than 500 full range dealerships and close to 1800 touch points. One added dynamic has been the growing product line in small commercial vehicle business and therefore the need to increase the reach of the dealer network. Setting up of a full range dealer network requires a large amount of capital investment. To take products like the Tata Ace and Tata Ace Zip to their intended market Tata Motors has set up a large number of sales outlets in areas where there is no presence of full range dealerships. Over the years Tata Motors has been able to steadily increase the number of dealerships but in the present scenario there are various questions that the organisation is grappling with. With the steady increase in product line, product focus is slowly going down. How does Tata Motors counter this? Should the organisation continue adding full range dealerships or should it move on to a business unit wise dealership model? Viability of dealerships is extremely important to keep the network healthy. The company is also faced with the challenge of increasing the revenue per outlet which is under tremendous pressure with competitors playing with the price structure of product lines. The challengefacing Tata Motors is what would be the ideal network size and structure which will help it retain its hold over the market.

Service network and its importance

In the commercial vehicle industry service network plays a great role when the customer is making a buying decision. Tata Motors has had an initial advantage as far as the reach and spread of the network is concerned. But with new players with advanced infrastructure entering the market and local players flooding the market with low cost options Tata Motors faces a tough challenge to ward of competition and improve the profitability of its channel partners. Tata Motors has already implemented a lot of innovative schemes in Annual Maintenance Contract (AMC) and Extended Warranty to keep their service advantage intact. Today customers are increasingly moving towards a total life cost of ownership (TCO) approach while deciding to buy a vehicle. Therefore the service advantage will play a greater role in pre sales. Over the years Tata Motors has ingeniously brought in various product & process innovations that has helped it stay ahead of the Indian commercial vehicle market. Even after opening up of the market and a lot of foreign players entering the fray Tata Motors has still held on to its position as the market leader. In addition to the constant product innovation a lot of other initiatives have helped Tata Motors get ahead of competition.

Special Initiatives by Tata Motors

Project Neev
Commercial Vehicle Business Unit (CVBU) has initiated and established their rural presence in a big way through Project Neev. Neev is currently present in the 6 states of Rajasthan, Uttar Pradesh, Bihar, Andhra, Maharashtra and Madhya Pradesh and has footprints in 238 districts, 1,798 tehsils, covering more than 150,000 villages. Approach to rural market is on the plank of self employment. Through a rigorous skill building exercise, local, unemployed rural youth have been inducted and trained to work as promoters of Tata Motors commercial vehicles, who work in their own habitations. This has become a successful inclusive growth program for the rural geographies. This program has been appreciated and recognized in various forums for innovation in rural marketing, noteworthy being recognition received from the Honorable Minister of Youth and Sports in the Conference of Ministers of States for Youth 12-13

Value Added Services

For close to 60 years now, Tata Motors has been a step ahead in offering new technologies, products and value added services (VAS). Several industry firsts have been introduced by the company. Some of the latest innovations on VAS are - the 4-year warranty (partnering the customer through the lifecycle of the product). This has been designed based on the lifecycle cost study of over 15 lakh Tata trucks & tippers operating all over the country, in varied terrain and loading conditions. Another innovation on VAS front is the new premium Triple Benefit Insurance across its range of M&HCV, ICV & LCV Trucks and Tippers. This is yet another first from Tata Motors in the Indian commercial vehicle space designed in partnership with Iffco-Tokio General Insurance Company.

Key Account Management Program

Tata Motors was also a pioneer in launching the Key Account Management program in commercial vehicle space. Even today, it is the only manufacturer in Indian CV space that has a Key Account Portal. Key account customers have multi-location branches and site offices which make it difficult to share product and service related information to their workshop managers, drivers, operations managers etc. The key account portal offers customers several benefits. Some of these are enumerated below: Customers can view resolution status of registered complaints through online tracking system. Various analysis reports are also available for making better decisions. Also the portal helps to be aware of customers older fleet and thus TML is aware & takes action for replacement with new vehicles. Customers can make online payment through portal for various services used in workshops.

10

 They also can contact various Key contact persons whose details are uploaded on the portal.

Road Ahead
Tata Motors has led the Indian commercial vehicle industry for almost 6 decades now. It is a major player in almost all the segments of the industry. For the organization, every market segment brings its own set of challenges, with its unique set of customers and competitors. For example the challenges faced by M&HCV segment are completely different from those faced by SCV segment. The price points, customer profile, customer expectations etc. are completely different in each segment. Being a player which has a presence in almost all the segments of commercial vehicles, Tata Motors is thus faced with multifarious challenges (as well as opportunities). With the incoming challenge from major global players the challenges have only increased for Tata Motors.

What strategy should Tata Motors adopt to garner the best profits and market share in all segments of commercial vehicles?

11

ANNEXURE-I
Figure 1- Basic Vehicle Categorization for Commercial Vehicles
Passenger Based on no. of pax
< 3.5T
3.5 to 7.5

CV
Rigid

7.5T16.2T 12T16.2T 25-37 T

Goods

35 T

Tractor Trailor

40 T

49 T

Figure 2 Product Categories in Medium & Heavy Commercial Vehicles

Rigid Truck
LPT 1613 LPT 2518 LPT 3118

Tractor Trailer
LPS 3518 Prima 4028 Prima 4923 Prima 4928

Tipper
LPK 1613 LPK 2518 LPK 3118 Prima 3138

12

Figure 3 Products categories in Light & Intermediate Commercial Vehicles

LCV - 4 Ton
SFC 407 LPT 407 SK 407 LPK 407

LCV - 7 Ton
SFC 709 LPT 709 LPT 709 HEx2

LCV - 9 Ton
SFC 909 LPK 909 LPT 909 HEx2 LPk 909

LCV - 11 Ton
LPT 1109 LPT 1109 HEx2

Figure 4 Product Categories in Bus Segment

LCV
Starbus 16-24s Starbus 28-36s Cityride 12-20s Tata Schoolbus

ICV
Starbus 36-42s Tata Schoolbus

MCV
1512 TC 1618 TC Bus Starbus 53-64s Divo bus

13

Figure 5 Product Categories in SCV Segment (Cargo & Passenger)

Micro Trucks <1500 kg GVW Micro Vans
Tata Ace Zip

Mini Trucks 1500-1990 kg GVW

Tata Ace Tata Magic Iris

Small pickups 2000-2500 kg GVW Mini Vans

Tata Super Ace

Large Pickups > 2500 kg GVW

Xenon

Tata RX pickup

Tat Magic

Tata Venture

Figure 6 - Customer Segments in Bus Industry, their Preferences & Implications of those on Customer Segments
There are 3 distinct customer segments STUs, Private Operators and Contract Operators Customer Preferences
Category Kay Purchase Criteria Relative Performance
Lower Higher

Implications

Operator Requirements Reliability

Acquisition Cost Resale Value Fuel Efficiency Performance Low cost of ownership

STUs and Municipal Corporations

Urban and sub-urban segment Tender driven purchase process Acquisition cost is the biggest purchase driver

Private Operators
Inter-urban segment

Passenger comfort, safety and reliability are the key purchase drivers

Passenger Safety Requirements Ride comfort Convenience

STU Private Operators Contract Operators

Contract Operators
Higher re-sale value, loser operating economics (mileage, maintenance cost etc.) are the key purchase drivers Fleet owner catering to the premium segment also value passenger comfort, reliability and safety

14

Figure 7 - No. of vehicles sold by Tata Motors and competitors in SCV Cargo Segment in last 6 Years
Year 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 Tata Motors 101847 89150 121403 152201 209895 254257 Hindustan Motors 3 50 281 312 157 214 Ashok Leyland 0 0 0 0 7593 34794 Force Motors 5483 1981 3678 6726 5862 3335 Mahindra & Mahindra 44976 47277 76487 105588 127029 142796 Piaggio 4945 9012 11094 9124 10579 2469 TOTAL 157254 147470 212943 273951 361115 437865

Figure 8 - No. of vehicles sold by Tata Motors and competitors in SCV Passenger Segment in last 6 Years
Year 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 Tata Motors 11136 28659 48931 51051 60203 94376 Force Motors 0 0 0 237 147 11 Mahindra & Mahindra 0 0 0 0 25434 22313 TOTAL 11136 28659 48931 51288 85784 116700

Figure 9 - No. of vehicles sold by Tata Motors and competitors in LCV Trucks Segment in last 6 Years
Year 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 Tata Motors 19009 17078 26997 30693 35293 26654 Ashok Leyland 0 3 0 1 0 0 Mahindra & Mahindra 4830 3486 4804 5449 5872 4344 Force Motors 902 1757 1886 1416 1464 1294 Eicher 3288 2404 3844 5287 6291 5082 Swaraj Mazda 2610 1495 1802 1189 1348 1517 TOTAL 30639 26223 39333 44035 50268 38891

15

Figure 10 - No. of vehicles sold by Tata Motors and competitors in ICV Truck Segment in last 6 Years
Year 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 Tata Motors 19138 13527 21214 25489 32326 24262 Ashok Leyland 1774 1271 1502 2810 4169 6477 Eicher 16274 10587 17099 22583 25734 22910 Swaraj Mazda 3663 2331 3864 4529 4875 3767 TOTAL 40849 27716 43679 55411 67104 57416

Figure 11 - No. of vehicles sold by Tata Motors and competitors in LCV Buses Segment in last 6 Years
Year 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 Tata Motors 13317 11789 15382 20706 20976 20499 Ashok Leyland 616 523 812 699 398 328 Eicher 1509 1022 1407 2484 3319 4040 Mahindra & Mahindra 5284 2613 2813 4785 4456 2315 Force Motors 5360 4027 5779 8321 11093 10926 Swaraj Mazda 2234 1944 1835 3031 3189 2321 TOTAL 28320 21918 28028 40026 43431 40429

Figure 12 - No. of vehicles sold by Tata Motors and competitors in ICV Buses Segment in last 6 Years
Year 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 Tata Motors 1417 3239 5251 5684 6066 6611 Ashok Leyland 765 682 1107 1588 2487 3058 Eicher 1317 1225 1726 2318 3091 3253 JCBL 0 0 1 0 0 0 Mahindra & Mahindra 0 0 0 0 84 79 Swaraj Mazda 2090 1605 1821 3276 3303 3913 TOTAL 5589 6751 9906 12866 15031 16914

16

Figure 13 - No. of vehicles sold by Tata Motors and competitors in MCV Buses Segment in last 6 Years
Year 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 Tata Motors 15522 12203 16850 15014 14650 11315 Ashok Leyland 16809 15344 15298 18837 18262 15584 Eicher 487 110 202 157 856 1371 JCBL 0 0 178 0 0 0 Swaraj Mazda 0 0 42 76 95 18 Volvo (incl. VBIPL) 240 484 607 568 677 601 TOTAL 33058 28141 33177 34652 34540 28889

Figure 14 - No. of vehicles sold by Tata Motors and competitors in M&HCV Trucks in last 6 Years
Year 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 Tata Motors 129961 84705 111822 145943 153972 101194 Ashok Leyland 56061 29796 39228 59863 56345 45437 AMW 3611 3623 3792 6792 10021 6533 Eicher 4392 1625 2119 5165 7719 7517 Volvo 823 913 1006 1000 595 616 MB India 206 219 215 103 85 0 Mahindra & Mahindra 32 6 0 843 3490 2977 Swaraj Mazda 0 0 0 2 3 21 TOTAL 195086 120887 158182 219711 232230 164295

17