In a bid to shore up its flagging passenger vehicles business, automobile major Tata Motors last week unveiled ‘Horizonext’, an aggressive customer-focussed strategy, which it termed ‘the beginning of a new journey’.
As a part of this, eight ‘refresh’ or improved versions of existing models were unveiled, and the company hopes these will re-kindle interest and boost vehicle sales.
Tata Motors’s passenger vehicle sales have been on a downswing for the last two years, and the numbers clearly bear this out. From around 22,000 vehicles a month two years ago, sales in May 2013 at 8,927 units fell 48.6 per cent over the year-ago period. While the sports utility vehicle (SUV) segment remained the fastest growing for the industry, Tata Motors’ SUV sales fell 30 per cent in May 2013 to 2,207 units.
A slowdown in the sector, severe competition, and the lack of new products in its portfolio have hurt the company and Karl Slym, Managing Director, Tata Motors, said at the unveiling that the company was at an ‘inflexion point’ for its passenger vehicle business.
Doubts, however, remain about the strategy’s likely success. “From the company’s viewpoint, it is a decent move but for sales to pick up it will take at least a year,” Surjit Arora, Analyst, Prabhudas Lilladher, a broking outfit, told The Hindu.
There is a view that the move has come too late as Tata Motors should have capitalised on the situation two years ago with the emerging preference for diesel vehicles.
“They had ready capacity,’’ said Mr. Arora. “At best, the new move will arrest volume de-growth, but prospects will not meaningfully change in the near-term given that competition has altogether new products”.
Competition is indeed moving very fast. Indigo CS already has new competitors like Honda Amaze and the GM Chevrolet Sail and Tata Indica already faces huge competition in its segment. The company has no presence yet in the fastest growing ‘soft-roader’ SUVs. Also, ‘people’s car’ Nano is selling only around 1,000 units a month against an installed capacity of 25,000 a month at the Sanand unit prompting the company to consider making other small cars there.
Mahantesh Sabarad, Senior Vice-President, Fortune Equity Brokers, felt the ‘Refresh’ models are an honest attempt by the company to address niggling product-related issues. “Every manufacturer goes through product life cycles and it is difficult to get new products into the market regularly. But the positive is that Tata Motors has not gone for new products entailing a huge expense during a downturn and will probably wait for an uptrend in industry to roll out new products”.