Tata Motors to restructure distribution to boost sales

Tags: News
After redrawing plans for distribution of joint venture partner Fiat’s products, Tata Motors is set to rejig its own passenger vehicle distribution network in order to boost sluggish sales. The third largest carmaker is also exploring new plans with Jaguar Land Rover (JLR) engineers to give direction to design and styling of Tata cars.

“We are trying to move from full-range dealerships to product-specific dealerships. We plan to set up 300 Nano-specific outlets as well as 100 for utility vehicles by March 2012,” said R Ramakrishnan, vice president – commercial, passenger car business unit, Tata Motors. The firm had 250 passenger vehicle dealerships as of March 2011.

Some of the 100 utility vehicle dealerships to be set up for selling vehicles such as Safari and Aria will be transformed into passenger car (Indica and Indigo) dealerships during this fiscal, Ramakrishnan informed, without giving a number.

In February this year, Tata Motors had said it would set up two separate Fiat brand centres in New Delhi and Pune as part of a redistribution exercise to boost Fiat’s lagging sales. The company has a joint venture with Fiat India to market and distribute its products. Tata Motors’ own passenger vehicle sales fell 16 per cent to 82,300 units between April and July 2011, compared with the year-ago period (97,974 units). Fiat India’s sales in the same period fell 19 per cent at 6,805 units against 8,401 in the corresponding period.

When questioned about JLR’s engineers playing a part in future design and styling of Tata cars, PM Telang, managing director (Indian operations) at Tata Motors, pointed out that the company has been able to do a good amount of work on its own in this regard. “There’s nothing like there is a huge gap and we need somebody else (for designing and styling Tata cars). They (JLR) are part of the Tata family, so some idea exchange will always happen,” he said. Last month, Tata Motors chairman Ratan Tata had disclosed that there would be engine sharing between JLR and Tata cars.

The Nano has had to take much of the blame for the overall plunge in the company’s sales. Its sales slumped to 3,260 units in July 2011 from a peak of 10,012 units in April this year. Telang emphasised that Nano needs more time to settle down in the market. “Nano has a different clientele, people who perhaps never thought they could own a car. That’s why the decision making process is a little more complex as that’s a big step for them. It’s a very unconventional vehicle, so it’s taking some time in the market,” Telang told Financial Chronicle.

“The good news is that more than 100,000 Nano vehicles are running on the roads. More than 90 per cent users are very happy with the vehicle in terms of space, comfort, air-conditioning and fuel efficiency. So that clearly tells us that it’s on the right path and it may take a little more time (in the market),” Telang said.

Ramakrishnan said the company has received a good response for the Nano through Big Bazaar retail outlets and will continue to take more such initiatives.

“The Tata Nano per se has not clicked with consumers and there isn’t any specific reason for that. The fact that the company has built up capacity of 250,000 units per annum and is able to sell just 3,000 to 4,000 a month is definitely discouraging. On the other hand, Tata needs to focus on its core portfolio be it the new Aria variant or refurbished Indica,” said Surjit Arora, auto analyst at Prabhudas Lilladher.

Besides, to increase the presence of Nano overseas, Tata Motors is looking to open assembly plants in SAARC countries, ASEAN markets and Latin America. “Looking at the potential, we can think of CBU (completely built units) at first and then consider CKD (completely knocked down) assembly for these regions,” Telang said. The company has already launched Nano through CBU route in Sri Lanka and Nepal this year.

The company on Tuesday also launched a two-wheel drive variant of the Aria crossover SUV priced at Rs 11.61 lakh to Rs 14.26 lakh (ex-showroom, New Delhi) to take on Skoda’s Yeti, Toyota Innova and Mahindra’s upcoming global SUV.

saahilanant@mydigitalfc.com

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