In a bid to regain market share in the commercial vehicle segment, and meet the changing market requirements, Tata Motors is betting on new modular platforms as well as de-bottlenecking supply chains and adding capacities wherever required.
The country's largest commercial vehicle maker lost market share in segments like medium and heavy commercial vehicles and pickups in the last few years as competition rose and existing players too became more aggressive. Tata Motors rolled out its Turnaround 2.0 strategy, aimed at the reversing the trends, a move that has started bearing fruits.
In the year-ended March 31, the company's overall CV market share has picked up to around 44 per cent. However, it still lost some market share in the MHCV segment, which currently stands at around 51 per cent. Therefore, the company will look to do more of de-bottlenecking and enhancing capacities this year.
"One may not see a big announcement that we are putting up a big plant. But, what we are doing consistently is lot of actions in terms of de-bottlenecking. De-bottlenecking can happen through continuous improvement, which is at one end of the continuum, to investment into new capacity, new machinery or new equipment, which is other end of the continuum. We have been doing this past one year to some extent and we will be doing it more this year," said Girish Wagh, president of Tata Motors' commercial vehicle business.
The de-bottlenecking was also necessitated with the company running at full capacity in some of the lines, where the product demand was high.
"On some of the lines, our capacity utilisation went even beyond 100 per cent. In some of the lines, we even introduced a second shift and third shift as it demanded. The restrictions were more on the suppliers side," said Guenter Butschek, MD of Tata Motors.
Additionally, within its existing plants, the company is creating capacities for new products like the Ultra range of trucks, which come with a completely new driver cabins. So, the company is investing in capacities for these cabins and new three litre and five litre engines that power these new range of trucks.
The company typically invests close to Rs 1,500 crore in its commercial vehicle business each year. This investment will be increased over the next 2-3 years to develop products and engines that will meet the BS-VI emission norms kicking in from 2020.
As India's economy picks up pace and new segments like e-commerce emerge, demand for new products is on the rise. To meet the rapidly evolving market Tata Motors is now focusing on modular platforms, one platform with multiple applications, so that customer demands can be met faster.
The Ultra range of intermediate and light commercial vehicles is the best example. The company has been test marketing Ultra range of trucks with select customers for near a year now. On Wednesday, it formally launched the range nationally. In all, the Ultra range will consist of 14 trucks, which have over 50 applications like refrigerator vans, water tankers, poultry trucks, containers, tippers etc. Emergence of hub and spoke models will lead to increasing demand for more small and medium duty trucks and the Ultra range (products in the 7 tonne to 16 tonne gross vehicle weight) will fit in there.
The modular technology will also be increasingly looked at other segments too.
"If I have modularity, higher carry on content, then I can de-risk myself (to market cycles) much better. I can give better economies of scale to the supplier, I can also have better economies of scale and therefore, I can also manage my operations better. So, this whole modularity and commonisation that we are doing is therefore meant to address a lot of this, whether de-risking or improving reliability of the product, reducing the time to market...," said Wagh.
Overall, the ILCV industry grew by more than 20 per cent last year, to around 105,000 units, while Tata Motors saw its ILCV sales rise 37 per cent. The company is hopeful that the Ultra range will help it gain overall market share further.
"This market segment is expected to further grow. We have seen a very nice growth rate last year, higher than the market actually grew and we expect continuation of the journey for the market as well as to us. Now that we have the full product range of the Ultra available, then we have a much more aggressive play in the ILCV segment and then we can again outpace the market, which effectively means we expect a significant gain in market share in the fiscal year," said Butschek.