Tata Motors Strategy

Topics: Automobile, Tata Motors, Truck Pages: 6 (1838 words) Published: April 24, 2013
Tata Motors

Industry Analysis: Tata Motors is currently situated in India with only 6% of the revenue coming from exports. India’s automobile market has grown steadily over the last seven to eight years, with the exception of the previous two years where the effects of the global downturn were felt, primarily in sales of passenger vehicles. Indian automobile market (passenger vehicle) share is currently little more than 4% of the total available market. In the year 2011-12, total 2.53 million passenger cars were sold in India. Currently India has 31.4 million middle class households. In next 5 years, this number is expected to reach 53.3 million middle class households, thus providing a great market opportunity for car manufacturers. HHI for passenger car manufacturer market is 2139 (Exhibit 1) which is relatively low. There are more than 20 car manufacturers currently present in Indian market. Prominent factors which govern the selection of a passenger car are Affordability, Fuel Economy and Luxury. In case of commercial vehicles, 0.89 million vehicles were sold in the year 2011-12. HHI for commercial vehicles is 4326 (Exhibit 2). Currently there are 4 major competitors in this segment. What business the company is in: Tata Motors is India’s largest automobile company. It is the leader by far in commercial vehicles in each segment, and has third highest market share in passenger vehicles segment. The company is the world’s fourth largest truck and bus manufacture. Who will be its targeted customers: 85.1% of the total revenue (10.9 billion USD) of Tata motors comes from Domestic vehicle sales in India. Hence, India is the primary target market for Tata Motors. Being the low cost leader, target customers for Tata motors are middleclass households and youngsters which are the final consumers of passenger vehicles. For recently acquired luxury brand Jaguar Land Rover, target customers are affluent class of the society. Target market for this brand is US and Europe. In commercial vehicle segment, main customers are transport companies for heavy or medium duty trucks and government transport authority for buses. What products or services it will offer: Tata motors’ core products or services are Domestic Vehicle Sales (85.1% of total revenue), Exports of Vehicles and spare parts (6%), Domestic Spare Part Sales (4.4%), and Vehicle Financing (0.1%). Vehicle portfolio of Tata motors consists of passenger car vehicles, medium and heavy commercial vehicles and military vehicles. After acquiring Land Rover and Jaguar, Tata has a portfolio of passenger cars from micro cars to super luxury cars. In case of commercial vehicles, Tata offers vehicles ranging from small pickup trucks to extra heavy commercial trucks. Currently Tata motors are third in terms of market share (13%) in passenger vehicles market in India and first in commercial vehicles segment with a market share of 60%. 63% of the total revenue (vehicle sale) is from the sale of commercial vehicles while 37% is from the sale of passenger vehicles. Other sources of revenue are sale of spare parts, servicing of sold vehicles, financing to customers and retailers. Military vehicle sale plays a very small part in revenue generation due to government restrictions. How it will go about achieving all this: Tata entered into Indian passenger car industry with the launch of Indica in the year 1998. From then till now, Tata Motors’ strategy has been to be the low cost leader in the market of passenger vehicles. With one of the best manpower in the country and acquiring well known Automobile design firms (eg. Trilix), Tata Motors has managed to maintain its low cost leadership in almost all passenger car segments in which they are competing under Tata brand. With one of the best distribution and service network in India, Tata has managed to have a competitive edge in pricing. Currently Tata Nano is the lowest price car in the world in micro car segment. For other brands of Tata...
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