Ten things Tata should do to turn into a global manufacturer Part II

I had written about  the problems at Tata motors back in September 2011. Tata motors although a major fighter for the second spot after Maruti in the Indian market back then, was already losing its edge over competition.  Today  Tata Motors has fell to fifth place and might soon fall to sixth if things don't improve.

 Here's an article I wrote in 2011 that all is not well in Tata Motors.

http://boyracer.blogspot.in/2011/09/ten-things-tata-should-do-to-turn-into.html

Mr.Ratan Tata, an avid car lover at heart (Parsi genes you see..) has during his tenure put everything in the company to keep it fighting fit. Now post his departure Tata motos has tried to rope in the MD of GM, India Mr. Karl Slym who has started working right away at trying to arrest sales, but minor facelifts have not work for Maruti, Ford, Honda or Tata ever. What else can Mr. Slym do for Tata Motors remains to be seen.

1. Image: Is your next car going to be one from Tata Motors? A majority will say No without hesitation.  Tata Motors has an image of a cheap truck and car maker. Customers buy Tata cars mostly because it is the cheapest in the segment or because they expect the product to withstand abuse.  In the Indian Market where people do not trust their own nations products, Tata has an uphill battle. Constant quality niggles make things worse.

Logo: The First and foremost thing Tata Motors should do is design a desirable Logo. The current logo has an industrial feel to it. Another major step in image upgrade is to renovate dealerships. Subway sandwich chain of restaurants have the same cooking stove, same breads, same wallpapers, same chairs and tables and menu all over the world. This is something that goes a long way in building an image.

Brand Ambassador: Chevrolet used Saif Ali Khan and Rani Mukherji, Renault uses Anil Kapoor for its Scala, Nissan used Ranbir Kapoors services, Mahindra used the services of Jimmy Shergill for its Verito. Tata needs to do the same. An actor who is smooth and refined will do wonders for the brand. Amir Khan is a known as a perfectionist and is already endorsing Titan brand for Tata.

Pricing: Pricing the car decides the impression it will create on the masses. A Tata Manza with more features and space is still viewed as a cheaper car than Honda City or Chevrolet Sail. Especially at a time when Tata Motors has taken a hit and is revamping its product portfolio, now is the best time to reposition their cars. A company that doesn't make profit is not doing business but charity. Tata can Price higher end models with more features over segment leaders in a bid to take away a chunk of their market share. With the use of Brand ambassadors, the company should target ads right at segment leaders.

2. Model perception: When tata launched the Upgrade to its Sumo, the Sumo Grande, the excellent car could not bring in customers. The problem was not with the model but with the image associated with Tata Sumo. The marketers were quick to rebrand it as just the Tata Grande but the damage was done. Today while the Innova sells in huge numbers, Tata Grande has been a tame seller.

The same issue has plagued Tata Indica Vista and Tata Indigo Manza.  The rebrand came too late for both the cars. The Manza is still seen as an upgrade to the Indigo and that is where the image of the car takes a huge hit. A strong awareness campaign needs to be put in place differentiating between the cars. Indigo Ecs (entry level compact sedan around 5 lacs), Indigo XL(re brand it lounge XL removing the INdigo name) (mid-size sedan around 7.5 lacs) and Tata Manza (c-segment at 8+ lacs). The same also holds true for the Nano, Indica and Vista and the Sumo and Grande.

3. Corporate grille:  What is common in a Chevrolet Beat, Sail and Cruze cars or Hyundai I10, i20, Verna, Elantra and Sonata cars? The grille and headlights that make up the front have a generalized design making it easy for customers to recognize the cars with the brand. Tata cars lack such a similar uniform grille and Headlamp combination. It brings a company brand recall when they see the look on many cars.

PS: A honecomb design with led taillights is a rare combination and should help Tata motors step up its image.

Also helpful would be bringing uniforms for sales staff, uniform brochures and catchy coloured led lightings that brighten up the showroom and look welcoming enough. Half the battle is won if the customer walks into the showroom.

4. Tata Nano: When Tata Nano was launched in India in 2008, it was the most talked about car in the world. But today, the car averages 1000-2000 units a month. In contrast, hyundai eon and i10 cars average 8000 units a month. Maruti Alto Averages 20000 units a month. So what went wrong? The car is much smaller than the models it competes with. To add insult to injury Tata motors decided to price it cheaper than the competing cars leading to lack of any image for this small wonder. Those who cannot afford a car still see Nano as a car and those who can have image issues.

A quick and extremely effective remedy will be to have a cheap base model but raise the price of other models with added features to compete with competitors at the same price. Targeting the college going youth will also add to the cars personality. Some extremely well marketed kei cars are  the Mitsubishi-i,  Toyota IQ and the Smart car. A custom accessories program where customers can customize the car for different colours, alloy wheels, upholstery, stereo etc will also help strengthen the cars appeal. Also instrumental to the cars success is a doze of premiumness like a 2-seater convertible. DC designs has shown a nice convertible concept based on the Nano recently.

PS: A fasttrack edition Nano?

5. Comeptitive pricing and segmentation: Hyundai as a carmaker has successfully played the pricing card over time. The initial models of Hyundai (Accent, Santro) were priced below competition to lure in sales. But over time Hyundai has increased the prices of its cars slowly and gradually. Now Some of their cars are also priced higher then segment leaders. For e.g. When Honda City used to sell at 8-10 lacs price range, Hyundai sold the Accent at 6-8 lacs price range with competitive features. The accent replacement (Verna) saw prices rise higher at 7-9 lacs. The latest Hyundai Verna is now priced on par with Honda city and even higher. Correct compeitive pricing is an important aspect as it helps the carmaker make the customer see how they have envisioned the car and the level at which it is targeted.

Tata's flagship Aria falls in a no mans land. While most people compare Xuv500 to Safari Storme. Aria sales are also dismal. This is a big opportunity for Tata to peg the Aria straight into the Ford Endeavour/ Ssangyong Rexton/ Toyota Fortuner territory. Although Quality levels and feature list needs to be improved. This will help the company command better profit margins and enter the premium market.

I would also strongly suggest the company to launch Magic Iris to help Nano compete with the 800/Alto/K10, Eon and Spark cars. I've mentioned before on numerous occassions how maruti has succesfully played the two car card for each competing segment. Alto-Astar, Estilo-WagonR, Ritz-Swift are strong examples. Hence Magic Iris can help Nano increase the product visibility and bring in volumes.

PricingAria higher brings Storme right into the XUV500 territory which is selling like hot cakes. Another excellent opportunity to increase profit margins. Tata Aria has not been able to sustain sales against the XUV500 but Tata Safari is a succesful platform and commands respect and legacy. This will help Safari storme rake in higher sales by eating into the XUV500 sales. It is given that Safari needs to be kitted to the gills just like the XUV500 to keep the fight strong.

Similary Tata Grande MKII should be targeted at Mahindra Scorpio (both have similar size and engine power and tall UV stance), maruti Ertiga and Renault Duster. while Tata Sumo should be targeted at Mahindra Bolero and Maruti Eeco.

To tap into the potential customer market, Tata motors should Bring in Tata Winger in retail sales to compete with the likes of Chevrolet Enjoy, Nissan Evalia, Toyota Innova and Mahindra Xylo. Similarly Toyota Venture should be introduced to compete with Mahindra Quanto and Maruti Omni.

It is visible how the stress is more on Mahindra Cars mostly and then Maruti cars. The reason is both Tata and Mahindra are basically UV makers and hence their vehicles share lots of segmentation. While maruti on the other hand is the largest car maker with presence in most segments.

6. Timely Innovations: To beat competition, you have to excel the competition. Tata motors has offlate only played catch up with other companies. Whether its adopting a Common rail engine or climate control features, navigation functions or automatic transmission. I had mentioned two years ago how Tata motors strongly needs an Automatic transmission in its portfolio. Even today the company doesnt have an AT gearbox while all other carmakers including Archaic Maruti Suzuki and Mahindra also have one. Tata needs to pay attention to certain necessary points such as

-. Turbopetrol configurations: Turbopetrol engine are becoming the norm since carmakers are restricted by government to stick to smaller engines. Turbochargers provide higher power and fuel efficiency at the same time. Succesful cars are Fiat Linea T-jet, Ford Ecosport, Skoda Laura, Vw Polo GT and Vw Jetta. THis should help Tata motors compete with competition on power and fuel efficiency figures. Also minor upgrades to the engine weights and performance will go a long way in helping the company get back into consideration of the family car buyers.

-. Weight control: All Tata cars weigh higher than competing cars affecting overall performance of the cars. With ABS and Airbags becoming the norm, Steel guage is no more the measure of safety. The company needs to control weight on all its cars from Nano to Aria.

-Advanced transmission boxes: Newer cars are coming up with 6-speed gearbox, the higher ratios helping cars achieve better fuel efficiency figures. In such situation Tata should take the first step towards bringing 6-sp manual boxes to the entry level cars such as Indica and Vista. The company has recently announced a 6-sp Automatic transmissions for its Aria. Tata can easily achieve higher sales by introducing an automatic with its diesel engines for hatchbacks, a segment where Automatics are completely absent.

- Newer grille designs and bumper designs are no considered innovation and car manufacturers should accept that fact quickly. Blacked out headlights are a thing of the past. Better Try honeycomb lights with led bulbs, sunroof and adjustable rear seatbacks.

7. Design: Humans define beauty by what they see. Apart from Tata Safari Storme, no other car is commended for its looks. Also disrupting sales is the fact that the Manza, XL and ECS and Indica and Vista look very similar. The Tata Nano has a very unique design but its association as a cheap car is washing up any benefits it should receive. It might cost the company huge investments to get help from a reputed design house but refreshing designs are the need of the day.

 
 Fine tune performances to match the market leaders including the European car makers to match fuel efficiency and performance figures. weight loss for each model. One cannot beat a deadbat and expect it to fly in daylight and the same applies to the outdated models in the lineup such as ECs, Indica and Indigo XL. Snazzy colours and Designs, upholstery. Hyundai has creatively used the Accent to fill in the void of a sedan below its Verna till date.

8. Cost saving: Saving costs is a crucial part of a business. Tata motors has also seen loss pile up year over year affecting sustainability. The company should use unofirm parts for multiple platforms to save costs and work on improving Panel gaps and interior quality. Steering wheel coloums on the Aria, Sumo, Safari, Grande and Winger and Ecs, XL, Manza, Indica, Vista and Nano cars should be a start.Similarly Safety belts, Tyres, Emblems, Upholstry material can be used effectively.

9. Marketing: Only sales cannot sustain sales for a company. Tata motors need to put in place a strong marketing strategy. Tata motors has a huge existing customer base so it can be utilized via customer loyalty to boost sales. As suggested before Tata motors needs to cover the higher margins with competing cars but needs to keep a similarly equipped cars priced marginally low. Hold customer loyalty events and reward them with non automobile related gifts such as titan watches or Tata Steel stocks. Tie-up with non auto premium brands like Titan watches and Tanishq jewelry .

10.  Business: No company is a business if it is not making profits. Loss making operations and manpower needs to be trimmed. The company needs to think profits first and customer service later.No fixes can take care of sales in the short term but being prepared for the fight when the recession is over will help the company survive in the long run.

Random thoughts

A 1400CC Dicor SUMO?
A 6-sp AT Safari Storme (along with the Aria)?
A Turbo Vista Petrol (from the Fiat T-jet)?
A mini Aria to fight the bigger hatchbacks with a 1.3 Multijet?