Tata Motors to counter drop in sales in domestic and international markets
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Tata Motors is set to counterbalance the challenge posed by international vehicle brands like Mercedes-Benz, Volvo and Navistar in the Indian market. Ratan Tata said that they are planning to launch a new range of fuel-efficient vehicles to cement its position. “A new line of very competitive, fuel-efficient vehicles is being developed by Tata Motors to meet the competition head-on,” the company's chairman said in its annual report for 2011-2012.
Tata is aware of the threat to its sales by big international names. “In the coming years, Tata Motors' predominance in commercial vehicles will be challenged by the entry of international brands like Mercedes-Benz, Volvo and Navistar, which have all entered, or are in the process of entering India,” he said.
In the fiscal year 2011-12, Tata Motors led the Indian commercial vehicles by a huge margin, with a market share of 58.45 per cent. This, however, is about 5 per cent lower than its market share two years ago. Tata was followed by Mahindra & Mahindra with 15.69 per cent, while Ashok Leyland stood third with 11.01 per cent.
In the passenger car segment, Tata believes that other automotive brands in the country pose tough competition. Its share has come down to 13 per cent last fiscal year from 14 per cent in 2009-2010, majorly because of new passenger car models by brands like Volkswagen, Skoda Auto, Mahindra and Mahindra Ltd, Nissan Motor Co. Ltd. and Maruti Suzuki India Ltd.
Apart from this, the sales in mid-size segment have also gone down considerably. In this segment, Tata sells Indigo which fails to stand against other cars like Hyundai Verna and Swift DZire that boast of impressive performance and looks.
Ratan Tata believes that Nano has a huge role to play in the establishment of the company's primacy in the Indian market. Although Nano never attained the popularity it was expected to, Tata said, "The potential market for such an affordable car is enormous throughout the developing world.” He further added, “The fundamental economies of the Nano, which was globally acclaimed when it was unveiled in 2008 and which was plagued with start-up roadblocks in the state of West Bengal, will continue to establish itself in the Indian market with a wider sales and service network.”
Besides Indian market, Tata also concentrates on world market with the ownership of two UK-based luxury brands, Jaguar and Land Rover (JLR). JLR is accountable for roughly 60 per cent of the total sales and 90 per cent of the net profit made by the company. Currently, Tata is expecting the sales of the two brands to be impacted by the economic slowdown in the West. The company is in the process of expanding its operations to China, which might displace US to become the second-largest market for JLR after UK. However, according to Ratan Tata, these steps are not enough to compensate for the slowdown.
Ratan Tata confirmed that a range of moderately priced lifestyle vehicles under Land Rover are in the pipeline. Manufacturing units in China are being considered to cater to the demands of the customers of the region. “The company will be offering cars with new higher-powered, more fuel-efficient engines to meet the customer preferences,” he said. With all these measures, Tata hopes to regain the position it enjoyed in the domestic as well as international markets.
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