Tata Motors 3.0 — Playing it Safe and Electric
As you crawl to a stop at any traffic signal across India, a few things remain constant. The honking doesn’t stop even though the wheels have and there is at least a 70% chance that you will be flanked by either a Maruti Suzuki or a Hyundai vehicle. The Indian passenger car market has had the same story for the past two decades but 2020–30 seems to have all the ingredients to be a game-changing one.
A Maruti Suzuki or Hyundai vehicle usually ends up as either the number one or number two most valuable purchase that an Indian family makes in their life. The reason why these two brands have such a high level of dominance in the Indian market is primarily due to the below-mentioned reasons and from a strategic standpoint, it would be a futile exercise to go against them on these parameters.
- Low cost of purchase
- Low cost of ownership (mileage and service)
- Wide dealer and service network
- Resale value and market
- Availability of vehicle finance option
How to Win India?
If you are a brand like Tata Motors with just over 6% market share, what exactly would your path to success look like in your home market? The answer is all about going after a niche but growing trend where the market leaders are considered weak and then raise the bar or rather change the game to consolidate the market. The Tata Nexon was thus born.
While the market leaders do a great job in most parameters, they do a rather poor job on three factors that have so far not been in the limelight in the Indian market but is fast gaining ground as an upcoming trend
- Safety
- Electric Mobility
- Technology
The Affordable Safety Positioning
Volvo used to own the safety pillar amongst the automobile brands but plays a very negligible role in the Indian context. The brand has also led to the belief that safety is an expensive affair and hence the mass-market customer did not consider safety to be a big decision-making parameter.
While the Altos and i10s are attractively priced and cheap to maintain, they are also one of the unsafest cars in the world. The proud answer to the ‘Kitna deti hai’ question comes at a cost and today half of some of India’s unsafest cars belong to either Maruti Suzuki or Hyundai. The Tiago with a 4 star NCAP rating is probably one of the safest entry-level hatchbacks in the Indian market today. The Tiago along with the Altroz and Nexon which are part of the 5-star club have opened up the safe yet affordable value proposition for the Tata Motors brand to occupy and build upon.
High Performance and Affordable Electric
While Hyundai had launched the Kona electric much before the Nexon and MG’s ZS EV, the high price tag made the car inaccessible to most of the EV enthusiasts. Nexon’s entry-level EV comes at around ₹10 lakhs cheaper than the Kona and ₹4 lakhs cheaper than the MG making it one of the most value for money electric car not just in India but the world.
The Tata Group’s One Tata program that combines multiple business units to support and build the Nexon EV also gives the brand a sizeable moat as it would be easier and cheaper for Tata Motors to build the ecosystem required to make the electric car successful. From Tata Power to Croma’s retail footprint, the advantage seems to be clear and powerful.
Technology and Ease of Ownership
The Nexon EV is also an active participant in the currently trending and much-needed integration between tech and the automobile industry in India. With over 35 connected features, the car is already one of the most sophisticated in terms of connectivity and if the success of the Kia Seltos and MG Hector is to mean something, then the Indian car buyer’s interest in having tech-enabled vehicles is here to stay and grow.
On a personal note, I am more excited about the company’s entry into the subscription economy. Hyundai and Mahindra already play a role in this ecosystem with third-party players like Revv but the pricing so far has been extremely steep.
The Nexon EV if priced well for the subscription business can be a game-changer as it will help the brand gain market share by pushing out higher volumes. Higher volumes will also ensure that the overall EV ecosystem starts to evolve at a faster rate thereby kickstarting a virtuous cycle.
The Unbuckled Future
The recent hive off of the passenger car unit thereby making the business more viable and attractive for strategic partnerships is another bold bet that might propel the company to newer horizons and gain a stronger foothold in key market segments.
The COVID 19 pandemic has had a severe impact on the entire automobile industry in India and beyond but with the expected growth in personal mobility to happen immediately post the lockdown, 2020, and 2021 can be a make or break year for a very #vocalforlocal Tata Motors.
