A little bit of the Maruti Suzuki mantra to turn around the fortunes of Tata Motors? With over two decades spent at the market leader, that is exactly what Mayank Pareek has in mind. About 40 days after taking over as the president (Passenger Vehicle) of India’s largest automaker, Pareek has set the ball rolling with a plan to triple the sales network in three years, double the share of rural sales and improve the brand image by upgrading the customer experience at dealers.
“We have to do segment-focussed marketing, especially in the rural markets where our share is just 16% and other players are at 30-32%. Unless we are represented widely we can’t be competing, so we expect to double, and triple our network in three years. Initial signs, like the recent JD Power survey where we showed the second highest improvement, is encouraging, but we have to cover a long distance in customer experience,” Pareek said.
He added, “I have not joined here to maintain the status quo, but I cannot share the timetable for a turn around which I have shared with the management. One good product can change everything and what I have learnt in my meetings of the past few days that people want Tata Motors to succeed, – that is very heartening.”
Pareek’s plans will be supported by a “robust” pipeline of products. Till 2020, Tata Motors plans to launch two completely new models every year – that translates to over 10 new cars. “I cannot give model wise comments because it is too early, but in the hatchback segment we are not properly represented and we need more sedans and SUVs,” Pareek said.
However, Tata’s most recent launch, a model touted to be its turnaround vehicle – the Zest compact sedan, has fared poorly in the market selling just about 3,500 units a month, as compared to the company’s initial target of 5,000 units. In comparison, the top-selling Maruti Dzire sells about 15,000 units, while the Honda Amaze sells 5,000 units. Pareek blamed this on a component shortage at suppliers. “We have retailed about 10,000 units (since launch in mid-August) and have about 6,000 additional bookings. There is a supply constraint on the AMT, petrol engines and the Harman-Kardon entertainment system on top variants. For a company known for its diesel cars, the encouraging signs is that 60% of Zest demand is for the petrol,” he said. In January, Pareek will do the first launch in his tenure – the Bolt hatchback.
The third-largest player in India’s 25 lakh unit PV market till 2012-13 fiscal with a 12% market share, Tata Motors has seen a sharp slide in sales over the past three years on the back successive product failures like the Nano micro hatch, Aria MPV and Manza sedan. As of April-October 2014-15, Tata is the fifth player behind Maruti, Hyundai, Mahindra and Honda with market share at about 6% and volumes down 32% to 86,802 units.
“We were at reasonably good market, but that has come down over the last few years. The current position (in terms of market share) is not acceptable. We will definitely start inching up. We have top be best-in-class to compete,” he said, adding that phasing out loss-making products will also be looked at.
While Tata Motors has seen declining volumes and profits in both the domestic commercial vehicle and PV businesses, the company’s UK based subsidiary Jaguar Land Rover (JLR) has been performing well. Tata Motors’ profits in Q2FY15 fell 7.1% to Rs 3,291 crore, while revenues rose 6.5% to Rs 60,164 crore.
The Tata Motors scrip at the BSE closed 0.73% down to Rs 526.60 on Monday.