Tata Motors aims to be number 2 player by 2020

New senior faces to help the company change poor perception quality of its products

Tata Motors, the country's largest automobile company, is keen to arrest the recent fall in ranking and get back on the growth path to claim the number two spot in the car segment in the next eight years.

The Mumbai-based company which is struggling with aging brands like Indica, Sumo and Indigo has made multiple organisational changes to improve its competitive positioning especially in the passenger vehicle (PV) business, which has seen a steady slide over the years.

A report prepared by brokerage firm Motilal Oswal outlines some crucial changes Tata Motors as done or in the process of making "to aim to be a credible #2 player in the PV by 2020 and maintain market leadership in commercial vehicles".

The report "Rolling up sleeves" was made after analysts of the firm met with Tata Motors managing director Karl Slym. Passenger vehicle sales of Tata Motors stood flat at 2,48,068 units in the period April-December in the domestic market even as the industry reported a growth of 8% selling 1.95 million units.

From being the third largest player in India in the PV space Tata Motors lost the spot to Mahindra & Mahindra this year even as the envisaged potential for the Nano, the world's most affordable car, remains largely untapped.

"(Karl Slym) has set up a road map to revive PV business by focusing on consumers and offering exciting product portfolio, improving quality and improving overall consumer experience in sales and service. While product portfolio changes would need at least 2 years, it plans to improve other aspects over next 2 years", said the report.

Tata Motors recently inducted two new faces at the senior level for bolstering its PV operations. Ranjit Yadav from Samsung India and Neeraj Garg from Volkswagen India joined the company in the marketing and sales wing. Additionally the report states that M Venkatram who was with General Motors, Korea has been inducted into Tata Motors to look after global sourcing.

New senior faces in the company will thus help it change the poor perception quality of the Tata Motors product and also the other common perception that Tata Motors PVs are mostly used in fleets, impacting consumer behaviour.

The company will thus leverage on parent's brand equity to build product branding and restructure existing branding (if necessary) and investing in new product developments, although it will take at least two years.

"Building excellence in buying and servicing process, with an objective to improve consumer's perception for the products. Distribution and service network is strong, but focus is on improving dealership to enhance consumer experience in sales and service. Repositioning of Nano to excel consumer's perception", the report further added.

Even as the PV business of Tata Motors struggles especially with rising competition from several international and Indian companies the CV business of the company too is struggling with failing demand and increased competition.

"As the CV business is undergoing cyclical downturn, it is focused on being prepared for an eventual recovery. Also, Tata Motors plans to maintain its leadership by offering technologically superior products, with lowest total cost of ownership and superior service network. It expects M&HCV industry to post 10-15% CAGR over the next 5-10 years, while LCVs structural growth remains intact", added the report.