The Nexon is Tata Motors' first-ever compact SUV and has a lot riding on it. Mayank Pareek, president, PVBU, is confident the Nexon has what it takes to win over buyers in India.
The radical and snazzy looking Nexon, which is to be launched today, is Tata Motors’ entry vehicle into the booming and lucrative compact SUV segment in India. The company, which has embarked on an aggressive turnaround strategy, is targeting regaining five percent market share in both the PV and CV segments. Clearly, there’s a lot riding on the Nexon and it has the potential to dethrone the segment’s best-seller – the Maruti Vitara Brezza. Mayank Pareek, President, Passenger Vehicle Business Unit, Tata Motors, speaks to Autocar Professional’s Sumantra B Barooah.
In this journey of transformation, would you call the Nexon the most critical pillar of this transformative journey of this turnaround because it falls in a segment which is the growth driver of the industry?
Every product that we launch has a significant role in our portfolio, and so does the Nexon. What the Nexon gives us is an opportunity to address 12 percent of additional market. Today, we address only 59 percent of the market. The compact SUV segment is around a 30,000 units-a-month-strong market. That is a big space. We enter a very rapidly growing market. Last year, the segment growth was over 100. That way, it's a significant step in increasing our market reach.
The Nexon is going to face some stiff competition in the form of the Maruti Brezza.
Not only this product. India is an intensely competitive market. There are 18 players and each one outcompeting the other. So, it will be true also for this segment. What we are confident about is that we have a product that is far superior to any existing product – in terms of design, in terms of technology. For example, we are launching our two new engines – diesel with 110PS and 260Nm of torque.
Also, most companies only have a diesel engine; we are offering a petrol too. The idea is that the fuel price differential has come down. Petrol becomes attractive if you are not driving your car more that 80-100 kilometres a day. Everything that's possible is there in the Nexon (like the multi-drive and Harman infotainment system).
Unlike the overall passenger vehicle industry, the compact UV segment is still predominantly diesel.
The fact is that increasingly there is petrol demand. There's diesel (in the compact UV segment)n because there's no petrol there.
What could be the ratio?
In overall passenger cars in November 2012, the difference in fuel price was Rs 32. At the time, diesel share had gone up to 62 percent. Now, petrol is 49-51 percent or thereabouts. I don't see any reason why 30-odd percent can't be petrol.
Tata Motors is the No. 4 in PVs, but in UVs No. 7.
In passenger vehicles, our share is 5.51 percent (April-August 2017), which makes us No. 4 and we can be No. 3. (In passenger cars, Tata Motors has a market share of 6.16 percent and is the No. 3 after Maruti and Hyundai).
In utility vehicles, our market share is 2.68 percent. UVs has three sub-segments – conventional UVs is 7 percent, MPVs 7 percent, compact SUVs: 12 percent. Hatchbacks: 53, Sedans: 63, UVs: 29, Van: 5 percent. So, when you are not there, how will your market share grow?
All our other products are becoming older. You will see traction now, in the festive season. We have a clearly laid out policy to increase market share and our market coverage should increase. You can't be fighting in the same market every time. This way, the Nexon is significant.
What timeline do you see the No. 3 slot in PVs?
More than the No. 3 position, our idea is to see we are in the car buyer’s vision. Every car buyer, before purchasing a car, considers 2.6 cars in his consideration set. We should be in that set. After that, I am very sure that our products are so good that if you consider, come, drive, experience and engage them, then you will buy it. Market share is a consequence of that.
Any data to reflect the improvement in brand perception?
Brand perception should reflect in sales and market performance. Last year, the market grew at 9 percent and Tata Motors grew at 22 percent. This year, in Q1, industry has grown by 4 percent, we have grown by 10 percent despite the GST mix-up. That means we are outperforming, that customers are liking our products.
Every quarter, we conduct a survey called NPS (Net Promoter Score) to find out how many people are talking good about you and how many are talking bad about you. That is continuously increasing. People talking good would be 42 percent, NPS would be 20 percent.
Brand has many connotations. First is product. We launched Tiago on April 6, 2016. Every month we are able to increase its volume, word of mouth for the product has increased. The Hexa was launched in January 2017. February and March was normal, then we entered into GST. Despite that we sold around 8,000 till July, which is not bad. We launched the Tigor in March. April, the first month, was stable but then there was the GST impact. We sold around 13,000 units. Every product is showing me that the striking IMPact design we launched is getting accepted. There is a sustained improvement in brand perception.
What is Tata Motors' strategy in the UV space?
We will strengthen. UVs are growing continuously. We launched two products in the past six months. We will continue to strengthen our portfolio.
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