Tata Motors Ltd is looking to claw its way back in India’s competitive passenger vehicle market where it has ceded ground to foreign and local rivals.
On Thursday last week, Tata Motors said it has created a dedicated vertical within the passenger vehicle business unit called TAMO to facilitate innovation, explore new business models and strike partnerships for future mobility solutions.
Separately, the company also plans to reduce the number of platforms from the current six to two to make the business “future ready,” reduce complexities and cut costs, top company officials told reporters.
The steps are aimed at making the firm India’s third largest passenger vehicle maker by fiscal year 2019.
The officials, however, declined to comment on the fate of the company’s small car Nano and whether the model would be phased out.
TAMO will act as an open platform to network with global start-ups and leading technology firms to access new trends, innovations and solutions for the design of future products and services, said Guenter Butschek, managing director and chief executive of Tata Motors. It will create a digital ecosystem, which can be leveraged by Tata Motors to support its business, he added.
Butschek, the former chief executive at plane-maker Airbus Group SA, completes a year at the Tata group flagship on February 15, has been rapidly moving on the transformation plan initiated by his predecessor, the late Karl Slym.
He has been tasked with turning around the fortunes of a firm that has seen domestic passenger car sales and market share roughly halve in the past two years, with profit boosted mainly by its UK luxury unit Jaguar Land Rover Automotive Plc.
In his first interaction with reporters in March last year, Butschek had emphasized on the need to make Tata Motors agile and “future ready.”
Luxury sports car
The first product developed by TAMO is expected to be a luxury sports car and will premiere at the 87th Geneva Motor Show in March, said Mayank Pareek, president-passenger vehicle business at Tata Motors. The low-volume car will be aspirational in nature and have a “huge positive rub-off on the overall passenger vehicle business,” Pareek added.
The yet-to-be named model is expected to go on sale sometime in fiscal 2018. That will also be the year when Tata Motors will be launching two new platforms based on AMP (advance modular platform) architecture, which will underpin its future model strategy, said Pareek.
AMP will allow the firm to develop multiple body types—sport utility vehicles (SUVs), multi-purpose vehicles, compact cars and compact SUVs—at frequent intervals and lower costs.
The TAMO initiative has the potential to transform its brand image and help the company connect with the gen-next consumers, said Puneet Gupta, associate director, at IHS Markit, a sales forecasting and market research firm. Recently introduced models—Tiago compact car and Hexa SUV—have helped Tata Motors improve its brand image significantly and now the creation of a sub-brand will further help, he said.
“We believe by 2020, Tata Motors can make a strong comeback and become No 3 player in the light vehicle market in India,” said Gupta.
As part of the strategy, Tata Motors will deliver seven to eight product variants from two platforms, for greater coverage and economies of scale, Pareek said. “The new approach supports our effort to reduce complexity, enables future technologies and ensures global relevance,” he said.
The strategy is similar to the ones followed by global car makers, including Suzuki Motor Co. and Volkswagen AG. Fewer platforms help cut down product development time and pare costs amid rapidly changing consumer buying behavior.
The initiative to set up an innovation center is also not unique. Utility vehicle market leader Mahindra and Mahindra Ltd has a similar innovation center.
Mahindra created a Blue Lab in April 2015.
The facility hosts a community of innovators and meets thrice a year with the objective of creating a physical proof of concept of some of the ideas. The Aero concept derived from XUV 5OO, showcased by the company during the Auto Expo 2016, was the first product from the lab.