TATA ACE

PRESENTED BY GROUP 7

OVERVIEW OF INDIAN COMMERCIAL VEHICHLES

Three wheeler
Largest three wheeler market Compound annual growth 14% Usage
Cargo (44% of sales) Passenger (56% of sales)

MARKET SHARE - 3 WHEELER

7% 8% 8%

Price range Rs 1,00,000 to 2,00,000 Weight handling - 0.5 to 1 Ton Mileage 18 to 30 Km/L , Top Speed 50 Km/Hr

51%
26%

BAJAJ

PIAGGIO

FORCE MOTORS

M&M

OTHERS

LCVs

Compound annual growth 22% Usage

Cargo (83% of sales) Passenger (17% of sales)

MARKET SHARE - 4 WHEELER

5%6% 5% 51% 33%

Price range started from Rs 3,50,000 Weight handling 1.2 to 7.5 Ton Mileage 9 to 10 Km/L , Top Speed 100 Km/Hr
TATA MOTORS EICHER MOTORS

M&M OTHERS

SWARAJ MAZDA

Tata Ace
Light commercial goods carrier
A smaller 4 wheeled vehicle

Launched by Tata Motors in May 2005 Entirely new product category Pay load capacity of 0.75 ton Priced at Rs 2,25,000 Annual Target 30,000 - 25 % product availability across country Niche vehicle satisfying unique demands of Indian Transportation with a comparatively low price than auto rickshaws

Need for change

Truck penetration to increase due to :
Growth in road infrastructure
Highways connecting major cities Secondary road networks within state

All weather tertiary road network connecting rural towns

72% India's population

Threat to core business due to absence of

> 45 ton vehicle < 2 ton vehicle

Leading to the idea for Ace Cheap , nasty, rugged vehicle for India Market research to gain insights of potential customers

Market Research - findings

No additional demand in three wheeler segment

Need for a four wheeler with:

price, fuel efficiency and maneuverability of a three wheeler Safety, durability, additional payload and comfort of a wheeled truck

Four wheelers viewed as higher status vehicle

Price range of Rs 1,00,000 to 2,00,000

Segmentation
Functional Market segmentation based on the functional needs
Manual rickshaws and Carts 175 Kg 5km Free segment Tata ace (750 kg 1500 kg over a distance of 100 to 200 km) Pick up trucks 2500 kg 300 Km

Target Market :
45 % potential 3 wheeler buyer 15 % potential 4 wheeler buyer 40 % first time buyer

Segmentation- cont.
Customer market segmentation Divided into 4 categories
Performance sensitive 7 %
Performance and Brand Image

Balanced Perspective 25 %
Convenience, ROI, $ wheeler above budget

ROI sensitive 55 %
ROI, Lowest cost per mile

Acquisition price constrained 13 %

Lacking financial means

Challenges faced
Budget Overloading Capability Engine Selection Safety, comfort and Aesthetic consideration Sourcing and Production Marketing Distribution Consumer Finance

Distribution of Ace
Phased introduction approach Dealership format 1S
Only sales (no service and spares) 400 sq. ft. showroom 1-2 vehicles Each dealer to set up 8 to 20 - 1S centers

Rented sites with 1- 2 years contract Low risk and cost for dealers Suvidham :
trained rural mechanics on maintenance procedures on ace for free Free tool kits to mechanics

Mobile work shops

How does one identify the needs of developing ones dealers ?

Alternate method available for developing the dealer

Define criteria for appointment of channel partners Document channel objectives for sales people and channel partners

Define the profile of the customers to be serviced

List down all the customer service outputs in detail List the task in sequence which will drive the service outputs Get benchmark of good practices from knowledge of competition

Define channel structure and channel partners who constitute it Allocate the task among the channel partners

Work out cost of delivering CS outputs and prepare a budget

Advice the channel partners on the task and their benefits Define channel partner performance appraisal system and share it List down reports records and frequency from each channel partner

what factors lead to the success or failures in dealer development ?

 Break Even Unit Volume =

Fixed costs Unit Contribution

Unit contribution = Selling price Variable costs Target Volume= Fixed Cost + Profit Unit Contribution Pay back period= Initial Investment Annual Profit

The way forward

Build a new manufacturing plant in the north.
Plan to introduce the TATA Nano Meeting production requirements of Tata Nano Common parts and facility can be used to manufacture both Nano and Ace Both products are low cost products on similar platform Help in bring down cost. Export opportunities