Tata Motors may phase out old models like Indica, Sumo Spacio
MUMBAI: Tata Motors' cars portfolio hasn't had a month like March in a long, long time, with models like the Nano and the Vista fuelling robust double-digit growth over a year ago.
Still, one swallow won't make the company's summer, and the top brass has been considering a string of alternative strategies to counter lower-thananticipated sales of its flagship models, falling market shares and poor profitability of the automobile business in the face of competition from more contemporary rivals.
One of the options being weighed, said a person with direct knowledge of the matter, is de-emphasising the 14-year-old compact car brand Indica, and replacing it over time with more contemporary models in the same segment like the Vista.
Alongside, production of underperforming brands, like the Indigo Marina, and warhorse models, like the Sumo Spacio, may be stopped. The Tata Motors' top brass is also working on a plan to make optimum use of a factory in Sanand in Gujarat that currently produces only the ultra-low cost car, the Nano, and is therefore underutilised.
This would mean that production of some models being made at the factory in Pimpri on the outskirts of Pune could be shared between Pimpri and Sanand. Another measure being worked on is to lean on engine technology of Jaguar Land Rover (JLR), the two luxury brands Tata Motors had acquired in 2008 and spun off into a separate company.
A Tata Motors' spokesperson did not respond to queries emailed to him. Since 2006-07 , Tata Motors' growth has lagged that of the industry; and market share has fallen from 16.44% five years ago to under 12% in the current fiscal year till February (see graphic).
The Nano has been one of the biggest disappointments. Whilst the initial plans were to produce close to 20,000 units a month, Tata Motors has been able to average a little over half of that number. People close to the development say one way to increase utilisation levels at Sanand - and also tap into the tax incentives available - and in the process bring down costs is to have common welding , body and paint shops for the Nano and other Tata cars.
JLR will play a key role in enhancing the appeal of Tata Motors' current range of cars. For instance, JLR plans to develop a twolitre engine that will be modified to have a lower displacement and used in Tata vehicles like the sports utility vehicle , the Safari. Plans also include making the next-gen Aria (a crossover SUV), the Safari and the Land Rover Defender all on same platform.
Phasing out older models is also part of the revival strategy. Tata Motors has done this in the past when it stopped production of the Sierra and Estate models. The Indica will also become less visible as the company opts to focus on a more contemporary and fuel-efficient variant like the Vista.
Already, what began as the Indica Vista is now simply known as Vista in the company's communication material. Tata Motors' passenger car business has operating margins of 6-8 %, points out an equity analyst on condition of anonymity, as against 8-12 % for its peers. He adds that the share of passenger vehicles in the overall top line has come down from 28% in 2006-07 to under 20%.
"Since the launch of Indigo Manza (over 2 years ago), there has been nothing exciting from Tata - unlike its peers who have had many new launches . The company needs to bring new products to market and refocus marketing strategies," says Umesh Karne, auto analyst, BRICS Securities.
Ashraf hussain
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