Tata Motors' turnaround strategy is yielding results, but the mission is yet to be accomplished. Under the 'Turnaround 2.0' plan, there's a three-pronged approach to "win decisively in the commercial vehicle business, win sustainably in the passenger vehicle business, and embed the turnaround culture in the company".
In an exclusive interview, Girish Wagh, president - commercial vehicles, Tata Motors, talks to Sumantra B Barooah.
'Win decisively' in the CV industry is one of the three key targets for FY2019. What does it translate to in terms of actions in the CV business?
In terms of action, we will continue what we started last year. First is, be there with the customer, understand customers and their pain points. We are clearly focused towards serving the customer better – better profitability, more peace of mind. Also, the way business has migrated or progressed over the past few years, there is a clear need to engage with customers more and how we can help them better. This is something we have started doing a lot in terms of engaging with the customers.
Secondly, the business is done not only between the OEM and the customer; it is done by an ecosystem including OEM, financier, insurance, insurer and bodybuilder. Therefore, we are engaging with all the stakeholders and going to the customer to serve him better. This is on the market or customer front with a very clear objective of how we can serve the customer better. Internally, the clear focus is on cost reduction, cost management of some of the future products in the pipeline.
Thirdly, over the past year, we have put a strong product planning process in place with a separate organisation which focuses on that. Their job is to continuously understand what the customer wants, the changes happening in the global CV industry, and they are looking at the market through slicing it into multiple dimensions and see what kind of white spaces may come up. So, it's not only the product and tonnage. We are looking the usage, applications, multiple dimension.
What are the new parameters which have come up?
Application and usage. Tonnage and price continue to be the others. There are multiple dimensions by which we looked at the market. We have also looked at technology, aggregates. CVs, to a great extent, are an aggregation of multiple aggregates. Lot of work has done into the product planning.
As a result, we have a good visibility of a long-term product plan, which product will be decommissioned when, our aggregate plan, and technology. Technology, not only for BS VI, but also whether it is for autonomous driving but in a customised manner. We already have some models in the Prima range which comes with some of the basic ADAS technology. So, a map has been set out. There is a clear roadmap now available in the organisation to guide the organisation to work upon.
As the industry evolves, like in PVs where the entry level has moved up, do you see the entry level CV market moving up from where it is currently?
In each of the segments, whether it is small CVs, LCVs, ICVs or M&HCVs, in each of them, we clearly see a migration happening towards the higher payload. For example, a 16T GVW vehicle was a 2-axle vehicle, then you move to 25T GVW because there is almost a 35 percent improvement in cost of ownership. From 3-axle 25T, you move to move to 4 axles because there was some more improvement in cost per tonne kilometre and there is a movement towards 5-axle truck.
Clearly, the business dynamics or profitability is driving towards higher payload. A similar trend is visible in ILCVs and LCVs. The customer is very clearly moving up but at the same time it is not the case that the SCV customer will move to an LCV. You will have the market for each and every segment, but within that economics are driving movement towards higher payload.
Are you continuing the first-generation Ace? Is that variant still in production?
Yes, it is. The Ace makes huge business sense for customers. We have recently relaunched the Ace Gold. Our research suggests that people who own an Ace bought their second and third Ace for their business. There are some customers who have gone almost up to 10-20 Aces.
What is being seen clearly is that it is a strong self-employment generation vehicle. We have sold 2 million Aces with that much employment opportunities. There are customers earning Rs 25,000 a month, which is more than the earning in many other professions. And you become an entrepreneur also.
This theme came out clearly. People were also having an emotional connect with the earlier Ace, so we have come up with the Ace Gold because some people have said that the Ace is like gold for them.
We have also seen that the elder generation wants their young generation to secure employment quickly and is looking at what could be the employment opportunities for the next generation. That's another theme we have found. Even there, the Ace is making a significant sense.
Our economy is consumption driven, and consumption continues to be strong across urban, suburban and rural India where the last-mile connectivity is taken up by the Ace. Also, the big trend of e-commerce companies delivering goods to customers at their homes, is further accelerating the growth.
Organised retail is still very low, just a single-digit percent of the entire retail industry in the country. Just imagine the kind of potential which is there and the role Ace kind of vehicles will play.
What about Tata Motors' Neev project, which you had introduced and then tweaked?
Neev is about igniting and creating rural demand. We are present in 2100 tehsils across the country. Every dealership there has a dedicated Neev sales executive. We have also created Tata Gram Mitras who are long-arm salesmen and not our employees. They bring leads to us and earn incentives. We have thousands of such Gram Mitras.
Last year, our output per Neev sales executive actually multiplied two-and-a-half times. That is the kind of growth we have seen in the rural areas. Most of us believe there is further potential which one has to exploit further as the rural consumption and economy is growing. We are positioned well for it.
Lastly, will Tata Motors be able to regain the high of market share which it had before losing some, or has the market moved on and not realistic anymore?
There have been other examples also in the country where some of the other OEMs have grown their market share. So, it is quite possible. They have shown it.
We also have to continue with a positive mindset, and that's what we are doing. If you come out with good marked products, if you serve customers better, if you help them improve their profitability, then why not?
(Read the full interview in Autocar Professional's upcoming July 1, 2018 - Maharashtra Special issue)
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