TATA Motors LimitedTATA CVBU Brand Extension : SCVs - TATA Ace (Mini Trucks)

Interim Report

8th July 2015

Submitted By:Mit KotechaPgp 30207

Parent Brand: TATA Motors CVBU

• Share of commercial vehicles in four wheeler segment in India is 18.5%1

• Share of Tata Motors in the Commercial Vehicle business is 54.1%

• Product Categories under TATA CVBU:• Medium & Heavy Commercial Vehicles : e.g. SE 1613, LPT 2518, LPT 4018• Intermediate & Light Commercial Vehicles : e.g. LPT 407, 709, 909, 1109• Buses : e.g. Marco Polo• Pickups : e.g. TATA Mobile, Xenon• Small Commercial Vehicles (Cargo & Passenger) : TATA Ace, TATA Magic, Winger, Venture

Source: TML Annual Report1. FY 14 data

Goods Passenger

< 3.5T 3.5 – 16 T > 16 T 6 – 52 seats< 21 seats

Small CV / Pickups Light CV / Intermediate CV

Medium and Heavy CV BusSmall CV

Commercial Vehicles

TATA Motors CVBU Product Categories

Source: TML website

Extension: SCVs - TATA Ace (Mini Truck)

Different categories of SCV

and Pickup

3 Wheelers 4W Micro Truck 4W Mini Truck Pick-ups

Description

2 distinct segments • Small 3W, payload of

~400 kgs• Large 3W, payload of

~600 kgs• Used over short

distances – intra-city and rural movement

• Payload: 500 – 700 kgs

• Loading platform size - 1.5 – 2.5 sq. meters

• Used over short distances – intra-city and rural movement

• Payload: 700 – 1,000 kgs

• Loading platform size – 3-4 sq meters

• Used for intra-city movement, hilly terrain

• Payload: 1,000 – 1,500 kgs

• Loading platform size – ~3-5 sq. meters

• User for inter-city transport, between city and its satellite towns

Bajaj GC Max

Force Minidor

Piaggio Ape Tata Pick-upsTata AceTata Ace Zip

Source: TML Annual Report

Share of SCVs in total sales

Source: TML Annual Report

SCV Cargo contribute to ~37% of the TML CVBU sales.

54%46%

TML CVBU Market Share

TML CVBU Others

17%

37%

5%

24%

9%6%2%

TML CVBU: Share of Dif-ferent Categories

SCV Passenger SCV Cargo PickupsMHCV Goods LCV/ICV BusesUvs

Sales trend of the Parent Brand & Extension

The Parent brand has grown by ~47% and the extension

has grown by 55% from 2009 to 2012

Source: SIAM Report for FY 2009 & 2012

FY 2009 FY 20120

100

200

300

400

500

600

700

186289

213

300

Sales Trend of the Brand ex-tension vis-à-vis the Parent

Brand (in ’000)

Pickups & SCVs Others

Different applications and description of the brand extension (Product attributes)Differen

t categori

es of SCV

3 Wheelers 4W Micro Truck 4W Mini Truck Pick-ups

Description

2 distinct segments • Small 3W, payload

of ~400 kgs• Large 3W, payload

of ~600 kgs

• Payload: 500 – 700 kgs

• Loading platform size - 1.5 – 2.5 sq meters

• Payload: 700 – 1,000 kgs

• Loading platform size – 3-4 sq meters

• Payload: 1,000 – 1,500 kgs

• Loading platform size – ~3-5 sq meters

Haulage Segment

• Short distances – for intra-city and rural movement

• Short distances – for intra-city and rural movement; connecting rural hubs to nearest city/town market

• Intra-city movements, hilly terrain , short to medium distances

• Medium Distances –between cities, between a city and its satellite towns

Application

• Agri/Farm Produce, Poultry and Eggs, Processed Food & Beverages, Textiles, White Goods etc.

• Agri/Farm Produce, Poultry and Eggs, Processed Food & Beverages, Textiles, White Goods etc.

• Fruits & Vegetables, Staples and Other Consumables, Dairy, Furniture, White Goods etc.

• Light metals (aluminum, copper etc.), Wood/log, Granite Stones, Cement, Sand, Furniture, Poultry, Consumables etc.

Bajaj GC Max

Force Minidor

Piaggio Ape

Tata Pick-ups

Mahindra Pick-ups

Tata Ace

Mahindra Maxximo

Mahindra Gio

Tata Ace Zip

4Ps classification for TATA Mini Trucks

Product

• High standard, technologically superior, sleek & sporty and augmented service network closer to most of the operating routes

Price

• Priced in comparison to 3 wheelers with lower maintenance cost

Place

• Distribution channel of TML is very strong with 500+ dealers spread across 200+ cities in India

Promotion

• Creative advertising: “Small is big” as the catch line for TATA Ace

In the SCV industry mini trucks are 48% by volume, where TML is market leader with 75% market share

1200 2000 2200400 800 1600 2600 3000

5.0

4.0

3.0

2.0

1.0

Micro Truck + 3W

(125k)

Pickups(100k)

Mini Trucks

(222k)

MS – 75%

Pri

ce R

an

ge in

Rs.

Lakh

FY12 Industry Volume – 460k

3500GVW1 in kgSource: TML Annual Report

1. GVW is Gross Vehicle Weight

Target Segment: Customer Profile and Needs (Behavioral Segmentation)

Customer Profile

Micro / Mini Trucks• First Time User (FTU) of CV• Vehicle meant to be a self-employment tool

• Wants reassurance that he is buying the ‘right’ vehicle

• Performance & ROI sensitive• Acquisition price constrainedPick-ups• Either an FTU or owner of SCVs (3W and/or 4W)

• Better risk taking ability than a Micro / Mini Truck customer

Key Needs

Micro / Mini Trucks• ‘Right’ information, easily accessible

• Finance schemes offering minimum down-payment

• Trust / faith on brand Pick-ups• Faster turn-around and ruggedness

• Respect and recognition for upwardly mobile status

• Financing

Typical customers are first time user, primarily seeking a self-employment option

Customer’s expectations from the vehicle and the Key purchase triggers

Role of Vehicle

Micro / Mini Trucks• Income generating tool• Upgradation from vehicle hiring to self ownership

Pick-ups• Income generating tool• Larger distance/more load deployment

Key Purchase Triggers/ Brand Awareness

• Flexible financing options• Flexible and Easy documentation

• Positive ‘word-of-mouth’ about product / brand

TATA Motors with the help of its brand equity and flexible options for purchasing has been able to become the market leader

Consumer Behavior: Migration of customers from 3 wheeler to Mini Trucks

Small 3 WheelersApprox 500 kg payload

Large 3 WheelersApprox 750 kg payload

Small Pick Ups Approx 1060 kg payload

It has wiped out an entire category

Mini TruckApprox 750 kg payload

Tractors, innovative ‘jugad’s and overcrowded buses are routinely used for transporting people in rural areas.

Rickshaws, overcrowded 3 wheeler and buses are common sight in the cities and towns

Migration of customers from 3 wheeler to Mini Trucks: Reasons

2. Lift from front when loaded

3. Fragile – incomplete cabins

1. Topple at Moderate speeds – 3 Wheels only

4. No provision for frontal impact absorption, no doors, fixed bench-seats, cramped cabins, handle bar etc

Unique Positioning of TATA Ace Products: Mini Truck Segment

Safety

Comfort

Reliability

Durability

The 4th wheel that upgrades the owner’s profile too…

High Profitability

The positioning and other attributes of Mini trucks offered customers a host of benefits

Mini Truck at the price of an Auto

Paradigm shift towards safety & comfort

Created aspirations: Auto wale to Truck wale / Rickshawale to Motor Malik

Gave employment opportunities to the First Time User segment and became a $1 billion brand in 18 months

A Billion $ Brand

Major competition in this segment has increased because of the success of TATA Ace

Mahindra Maxximo

Piaggio Ape Truk Plus

Force Trump 40 Launched Jan 2010

900 cc twin cylinder common rail direct injection

engine

25 hp power & 55 Nm torque

Payload of 850 kg

Contemporary cabin and front independent

suspension

Price Rs 3.28 Lakh

Points of parity and difference for the extension vis-à-vis its competitors

• 611 cc engine• 11 hp power & 31 Nm torque

• Payload of 600 kg• Larger loading area• Price Rs 2.02 Lakh

• 441 cc engine• 9 hp power & 21 Nm torque

• Payload of 503 kg• Smaller loading area• Price Rs 1.94 Lakh

• 441 cc engine• 9 hp power & 21 Nm torque

• Payload of 500 kg• Smaller loading area• Price Rs 1.91 Lakh

Tata Ace Zip Piaggio Ape Mini Mahindra Gio

Crucial points of difference for TATA Motors products

Technologically superior product compared to other Mini/Micro Trucks and Pickups

High power to weight ratio w.r.t. competition

Better fuel efficiency w.r.t. competition and TML has been the most innovative

Better styling, more comfort and more reliable brand

To be continued…