Tata Motors – Way ahead

MEP VI - Group 5

• Abhishek Panicker

• Kedar Huddar

• Koushik Ganguly

• Pushkar Sabne

• Rakesh Kadarkarai

Energy

Tata Power

Tata BP Solar

Chemicals

Tata Chemicals

Rallis

Engineering

Tata Motors

TACO Group

Voltas

Tata Projects

IT & Communications

TCS

Tata Teleservices

Tata Elxsi

Consumer products

Tata Tea

Titan

Trent

Tata Salt

Tata Swach

Services

Tata Hotels

Tata AIG Life & GIC

Materials

Tata Steel

Advance Materials

Tata Group

Tata Motors – Laggards in a stressed market

Commercial Vehicles Passenger vehicles

Market Growth -8.4% 5.5%

Tata Motors -15.9% -3.2%

-20.0%

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

Growth status: FY 15 vs FY 14

Market Growth Tata Motors

54

.1%

5.8

%

49

.7%

5.3

%

COMMERCIA L V EHICLES PA SSENGER V EHICLES

MARKET SHARE: FY 15 VS FY 14

FY 14 FY 15

Market share in passenger vehicles has reduced from 16% to 6% in 10 years

Market share in commercial vehicles has reduced from 61% to 50% in 10 years

JLR – The SaviourTM

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Tata Motors Consolidated

JLR – The Saviour

TML

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Action Plan

Product related

• Launching new product lines – Passenger Cars

• Revamp / discontinue old models – All products

• Focus on CRM – Commercial Vehicles

Process related

• Increase operational efficiencies – All Tata brand plants

• Realign structure to match business segmentation

Product canvas

Tata Motors: Partnerships

Company name Country Relationship type Competency

MarcoPolo Brazil JV Designing buses and coaches

Jaguar Land Rover UK Acquisition (2008) Design and engineering capabilities

Daewoo South Korea Acquisition (2004) Heavy Commercial Vehicles

Tata Motors European Technical Centre

UK 100 % subsidiary Design and product development

Hispano Carrocera Spain 100 % Subsidiary Bus Manufacturing

Product canvas for TML

Passenger Cars

Commercial Vehicles

Buses

2nd in the

world

4th in the

world

17th in the

world

Passenger Vehicles

• Low switching cost

• Brand loyalty doesn’t impact much

• Advt and promotion

• Unorganized sector

• Option of contract labours

• Global suppliers

• Robust Public transport

• Rising fuel prices

• Hybrid and eco cars

• Favorable policies

• Big production facility

• Accessibility of raw material, vendors etc

Threat of new

entrant -High

Threat of substitute

- High

Buyer power -

High

Supplier Power –

Med

Industry Rivalry – Very highHigh number of competitors

Differentiation is minimalLow switching cost

Five Forces Model for Passenger Vehicles

Product Gap Analysis – Mass Cars India

Type B2 C1 C2 Utility A B1 D1 D2

Total sales 614,159 547,677 246,714 487,058 379,951 320,658 58,305 28,028

Tata Sales 8,160 48,182 8,282 12,144 22,356 37,158 260

YoY growth 8% 9% 12% -6% -4% 5% 14%

Market share 1% 9% 3% 2% 6% 12% 0% 0%

Model serving Bolt Zest Safari Sumo Nano Indica Aria

The required focus of Legend

Launch

Revamp

Product Gap Analysis – Premium Cars India

Ex show-

room Audi Mercedes BMW Jaguar

< 35 Lakhs 23% 3,105 22% 2,462 23% 1,585

35 - 50 Lakhs 27% 3,646 23% 3,105 23% 3,105 52% 1,503

50 L - 1Cr 41% 5,536 40% 5,401 47% 6,346 33% 954

1 Cr and

above 9% 1,215 15% 2,025 7% 945 15% 434

Total 100% 13,502 100% 11,192 100% 6,890 100% 2,891

Legend

Launch

Revamp & upgrade Nano

Youthful brand

Emerging markets

High density areas as ‘Traffic’

car

Buses

Tata Buses

2nd Largest Bus Manufacturer in the World.

Wide Variety

• Seat capacity wise- 12 to 67 seator

• Chassis – 4 tonne GVW (5 Mtrs) – 16 tonne GVW (12 mtrs)

• Catering to all segments

Growth Strategy = M&A

Tata’s Strength in Chassis &

Aggregates

Marco polo's strength in

body building & bus design

TATA MARCOPOLO

(TMML)

Tata’s Strength in Chassis & Aggregates

Hispano's strength in

body building & bus design of Luxury coaches

TATA Hispano Motors

Carrocera S.A.

Strengths

• Strong market presence

• Good regional presence in middle east, Africa, south Asia and south east Asia.

• Future ready

• Wide range of products

Weakness

• Low presence in Luxury Segment

• Losing market share in other sectors such as inter-city transport and city transport

Opportunities

• Potential markets in South Asian Markets Such as Vietnam, Thailand, Cambodia and African markets such as South Africa, Kenya, etc.

• Market penetration in the Luxury Bus segment via Divo Range.

Threat

• Losing market share in other sectors such as Inter city transport and city transport from 44% to 38%

Action Plan

Focus Penetration in Luxury & City Transport segment

FuelNEXT – The only aspect of HorizonNEXT relevant in this segment

Feature Collaborate with Govt. on Urban development like JNNURM to feature technologies like Hybrid & Fuel Cell for Green Initiatives

Approach Govt. for support and promote sale of such buses.

Consolidate On the present position by retiring old models.

Product lines of “SKOOL” , “STARBUS” and “Cityride” for volume business and enhancing market presence and .

Commercial Vehicles

- LCV, SCV, MCV & HCV

Tata Trucks

4th Largest Truck Manufacturer in the World

Wide Variety

• Prima- Heavy Transport Solutions TATA & TATA DAEWOO

• M&HCV – Transport & Municipal Solutions

• LCV – Transport Solutions

• SCV

Commercial Vehicle growth by segment

75 7398 82 71

244

328348

273

206

261

328

447

555

434

FY 2010 FY 2011 FY 2012 FY 2013 FY 2014

Sales volume, '000 units

LCV M & HCV SCV

SCV

Small Commercial VehiclesSTRENGTHS

1. Tata Motors is a pioneer in the mini truck industry in the continues to be among the top 2 players in the country.

2. Tata Motors is the leader in sub 2 Ton market with the Ace family, and has more than 70% of the market share.

WEAKNESS

1. High delinquency rates

2. Lack of financing options: Drivers lack credible credit history and it becomes difficult for banks, etc., to give them loans

OPPORTUNITIES

1. Increasing urbanization and stringent traffic regulations

2. Preferred over smaller 3-Wheel vehicles primarily due to the higher profitability

3. Rise in demand of SCVs in the rural sector driven by rising income levels and further urbanization of tier 3/4 towns and cities

THREAT1. Faces tough competition from 3Ws .The price gap between SCV Passenger and 3W makes it difficult for 3W customers to graduate to 4W2. 2-3.5 ton pickup truck space, however, Mahindra is the leader with close to a 70% share

SWOTSub 2 Ton - Tata Ace : 70 % Market Share

2 - 3.5 TonMahindra Bolero and Genio : 70 % Market Share

Action Plan

Continuously develop new applications (gas cylinder distribution, waste disposal etc.) and also educate the customers on the usage to continue segment expansion

Liaise with the local government authorities in order to create more business opportunities further promote SCV customers

Develop drivers for this segment as majority of the end users belong to lower economic section of the society and most likely will be the first time users of any kind of automobile

L, M & HCV

Covering the entire spectrumSegment Product OfferingAgriculture UltraBox/Straight PrimaCar carrier NovusCatering truck Prima/ NovusCement mixer Prima - TATA DaewooDelivery van Tata AceDump truck Prima (4 Models)Flat-bed truck LPS RangeRefrigirated NovusStakebody LPT RangeStep van LPT RangeTank truck NovusTow truck Prima/ novusTruck tractor Prima (Heavy & Med load)

Tipper Prima/ Novus

• Tata has a product to cater to all the needs of customer

• No need to crowd the market with new entrants

• Need to revamp old models LPT & LPS range

Acquiring Synergy

Tata’s Strength in Chassis &

Aggregates

Daewoo's strength

R&D & body building

TATA DAEWOO

TATA & DAEWOO came together to create a mid size truck . Large Size with Medium Capacity

Strengths

• Strong Market Presence

• 58% market share (Domestic & 92 % export Foreign)

• 7.7% growth in the export market

• Good regional presence in middle east, Africa, south Asia and south east Asia.

• Strong Distribution Network 6,600 nos.

• Wide range of products

• Technologically strong

Weakness

• Low presence in Heavy end Segment

Opportunities

• Potential Markets in South Asian Markets Such as Vietnam, Thailand, Cambodia and African markets such as South Africa, Kenya, etc.

• Market Penetration in the Heavy end via Primo Model

Threat

• Losing market share in LCV sectors

SWOT

Action Plan : Focus area is not product but Customer Engagement

Customer engagement

Tata world

Telematics

Fleet management

Truck Race championship

After sales & Service

Tata Fleet-man

Tata Delight

Tata Genuine Parts

Key Account ManagersPublic

TransportationLogistics providers Schools / Colleges

Analysis of the organization

Production Capacity

Industry Production Capacity

Production 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15

Passenger Vehicles 23,57,411 29,82,772 31,46,069 32,31,058 30,87,973 32,20,172

Commercial Vehicles 5,67,556 7,60,735 9,29,136 8,32,649 6,99,035 6,97,083

Sales 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15

Passenger Vehicles 19,51,333 25,01,542 26,29,839 26,65,015 25,03,509 26,01,111

Commercial Vehicles 5,32,721 6,84,905 8,09,499 7,93,211 6,32,851 6,14,961

Installed capacity : 6.59 Mn units

Utilization is meager 66%

TML Production Capacity

Location Passenger VehiclesCommercial

Vehicles

India – 6 plants 350,000 767,725

Abroad (Korea, Spain & Thailand)

0 45,330

Total Installed Capacity 350,000 813,055

Sales FY 15 137,000 318,000

Capacity utilization 39% 39%

Action Plan - Operational efficiency

• Can’t increase plant utilization – low market demand

• Need to achieve operational efficiencies with low utilization

Low start-up time / cost for batch runs

Cut-down older product lines – Less no.of models Better efficiency

Revamp plant layout for new product lines

MQB Platform – Same setup for different models: ~ 20% savings in op. cost (Industry norms)

HR & Organization Structure

Investment in Personnel & Development

Accelerated development

• ESS program

• Special assignment

Result oriented assessment

• Domain Expertise

• Customer orientation

• Team performance

• Financial performance

• Learning & Growth

Employee engagement

• Design Challenge

• Performance awards

• Hobby clubs

• Sports events

Current

CEO – Cyrus Mystry

MD – Guenter Butschek

Exec Director –Commercial Vehicles

President – Passenger cars

Head CVBU

Head PCBU

Head Small car

Head Engineering Research

Chief Strategic sourcing

Head – Corporate planning

CFO

VP – HR

Chief Legal counsel

Chief Internal auditor

Head – Corporate communication

Sr General Manager –Govt affairs

Company Secretary

ProposedMD – Tata

Motors

Head –Commercial

Vehicles

Bus

Trucks

M&HCV

LCV & SCV

Defence

Head –Passenger Vehicles

Mass Market

Head –Passenger Vehicles

Luxury

Head – Design & Development

Product Teams

SpecialisationSections

Head – Sales & Marketing

Product development &

Launch

Sales & distribution

After sales / Service

CFO COO

Head – Quality

Operations & Planning

Plant Heads

Head - HR

• Matrix structure – Reporting to domain head & Business Head

• Garbage can model – Product Dvpt experts ::: Domain specialists

R&D

Focus on R&D

6 R&D centers

India

South Korea

Spain

UK

Technology Partnership

Thailand for Pick up trucks

South Korea for High end commercial vehicles

Italy for styling & design

Brazil for Buses

Investing in future technologies

Investment in research for hybrid / electric vehicles

Compressed air engines with MDI called Mini Cat

Eco car in Thailand

Indica EV in Norway

Investment in R&D

Tata Motors JLR

Cutting Edge Technology Available• Buses – CNG Hybrid & Fuel Cell Technology• Cars – Air compressed engines,Solar & battery• IT Systems

6% of revenue spent on R&D

Action Plan

Product related

• Launching new product lines – Passenger Cars

• Revamp / discontinue old models – All products

• Focus on CRM – Commercial Vehicles

Process related

• Increase operational efficiencies – All Tata brand plants

• Realign structure to match business segmentation