You are on page 1of 14


Tata Motors Ltd. is one part of the business conglomerate, Tata Group, and was formerly known as TELCO (Tata Engineering and Locomotive Company). The other ventures of Tata Group include Tata Steel, Tata Consultancy Services, Tata Technologies, Tata Tea, Titan Industries, Tata Power, Taj Hotels, and so on. Headquartered in Mumbai, India, Tata Motors is a multinational corporation accounting for 70% cumulative market share in the domestic commercial vehicle segment. Today, the company is the worlds second largest manufacturer of commercial vehicles, worlds fourth largest truck manufacturer and worlds second largest bus manufacturer. It is a dual-listed company, which is traded on both the Bombay Stock exchange as well as the New YorkStock Exchange.. Tata Motors was first established in 1935 as a locomotive manufacturing unit. The first commercial vehicle was manufactured in 1954, in collaboration with Daimler-Benz AG of Germany. In 1960, the first truck, quite similar to a Daimler truck, rolled out from the Tata factory in Pune. Ever since its launch, the truck became highly successful. However, the success of the commercial vehicles was just the beginning of the flourishing and booming future of Tata Motors. The company went ahead diversifying itself and took up other products as well. Apart from exporting heavy-duty trucks, the company decided to come up with lighter versions for the local market. Thus, began the production of the first LCV (Light Commercial Vehicle) model, Tata 407 in 1986.

Tata Motors Limited is India's largest automobile company, with consolidated revenues of Rs.92,519.25 crores (USD 24 billion) in 2009-10. It is the leader in commercial vehicles in each segment, and among the top three in passenger vehicles with winning products in the compact, midsize car and utility vehicle segments. The company is the world's fourth largest truck manufacturer, and the world's second largest bus manufacturer. Established in 1945, Tata Motors' presence indeed cuts across the length and breadth of India. Over 5.9 million Tata vehicles ply on Indian roads, since the first rolled out in 1954. The company's dealership, sales, services and spare parts network comprises over 3500 touch points. Tata Motors, the first company from India's engineering sector to be listed in the New York Stock Exchange (September 2004), has also emerged as an international automobile company. Through subsidiaries and associate companies, Tata Motors has operations in the UK, South Korea, Thailand and Spain. Today two-thirds of heavy commercial vehicle exports out of South Korea are from Tata Daewoo. In 2005, Tata Motors acquired a 21% stake in Hispano Carrocera, a reputed Spanish bus and coach manufacturer, and subsequently the remaining stake in 2009. Hispano's presence is being expanded in other markets. In 2006, Tata Motors formed a joint venture with the Brazil-based Marcopolo, a global leader in body-building for buses and coaches to manufacture fully-built buses and coaches for India and select international markets.

In 2001, Tata Motors experienced a difficult phase with severe losses due to the decline in vehicle sales , spiraling manufacturing costs and capacities expansion plan that cost Rs. 13 billion. The difficult phase prompted the company to completely rexamine the market and customer markets. This re-examination threw up several interesting findings. Tata motors realized that there was an opportunity to build and market a light commercial vehicle that would ferry goods or passengers from town centres to villages and vice versa. Another important finding was the continuous improvement of highways and other road infrastructure in India would lead to the playing of larger numbers of heavier and faster vehicles along the highways. The increase in traffic would encourage transporters to store heavier goods convenient depots or warehouses along the highways from which smallrer loads would be tranported through feeder routes cities and towns. The company decided to build a complete new vehicle for the last mile distribution segment as part of its new products introduction program. The company decided to built a light commercial vehicle in all aspects and would help in last mile distribution. However the project require new ideas as the competition was intense in the proposed segment, which aws dominated by the three- wheeler cargo vehicles. The three wheeler was experiencing high growth rate at that time and the proposed new vehicle had to compete with them. Before commencing the design of the vehicle, the project team conducted the study in various parts of India to understand the exact need of the potential customer. The study found that the customer needed a vehicle that would provide fuel efficiency, overall comfort, less emission and reduced noise and vibration. The team also visited various foreign countries such as China, Thailand, Sri Lanka and Bangladesh. The team took more than a year to decide on the issue and opted for a four wheeler with a full forward cab front as it would help in lowering running costs and offer more loading area. The choice of engine for the vehicle was also a critical one. The team conducted a world wide research and for an appropriate engine and finally decided to modify the engine of its own passenger car, Indica. Various cost reduction measures were adopted to decrease the cost of the vehicle. After nearly four years , the results of the project club materialised, when the first batch of 150 vehicles, named Ace, was ready for rollout in 2005. Ace was powered . Ace was powered by a twin cylinder ,16bph, 700cc IDI diesel engine. The fuel efficiency of ace was estimated at 18-20 km per litre with a maximum payload capacity of 745 kg. Its sporty car like interiors, its noise and vibration levels were on par with passenger cars, not at the highest levels found in trucks. Ace had a full steel cabin with a display of car like features including elegant two toned seats, clear instrument cluster, utility trays, magazines pockets, twin blade twin speed wipers and combination switches.


Tata Ace, India's first indigenously developed sub-one ton mini-truck, was launched in May 2005 by Tata Motors Ltd. The mini-truck was a huge success in India with auto-analysts claiming that Ace had changed the dynamics of the light commercial vehicle (LCV) market in the country by creating a new market segment termed the small commercial vehicle (SCV) segment. The SCV segment targeted three-wheeler drivers, who aspired to graduate to the quality and safety of four-wheelers. The Ace offers superior safety, versatile performance in varied conditions, ease-of maintenance, style, comfort and costeffectiveness. Launched in 2005, the Tata Ace, India's first four-wheel mini truck changed the face of sub 1-tonne goods-carriage in India forever. It sold 100,000 in its first 20 months. Ace was powered by a twin cylinder,16 bhp, 700cc diesel engine. The fuel efficiency of ace was estimated at 18-20 km per litre with a maximum payload capacity of 745 kg. Its sporty car like interiors, its noise and vibration levels were on par with passenger cars, not at the highest levels found in trucks. Ace had a full steel cabin with a display of car like features including elegant two toned seats, clear instrument cluster, utility trays, magazines pockets, twin blade twin speed wipers and combination switches. Ace rapidly emerged as the first choice for transporters and single truck owners for city and rural transport. By October 2005, LCV sales of Tata Motors had grown by 36.6 percent to 28,537 units due to the rising demand for Ace. As for FY 2011-2012, the LCV sales increased by 23.5% to 323,118 units from 261,637 units in FY 2010-2011. This was primarily because of the year-on-year sales of Tata Ace continued to increase. Tata Ace has also been exported to several European, South American and African countries. Electric-versions of Tata Ace are sold through Chrysler's Global Electric Motorcars division. The basic idea behind launching Tata Ace was: Market Situation Govt plans of road expansion. High GDP growth rate positively correlated with truck penetration. High probability of increased demand in LCV segment. Company Situation Tata product portfolio lacked greater than 45 tons and sub 1- tonn vehicles. Scope of enhancing market share. Creation of a new segment of market in SCVs thus bringing in innovation.


India LCV Market Outlook, observed that the light commercial vehicle segment of the Indian automobile industry will grow at a good pace in future. With economic revival, increasing public & private spending on infrastructure and higher penetration of financing facilities, it is expected that the growth trend in each segment of light commercial vehicles (LCVs), be it passenger carriers or goods carriers, is to continue in the coming years. Both LCV passenger and goods carrier are estimated to register a sales growth of around 20% during FY 2012-FY 2015. Among all segments in the automobiles sector, CVs was the only one to witness a sharp decline when the economy faced troubled times. This again reaffirms the fact that its fortunes are closely, and directly, tied to that of the broader economy. The year 2008-09 saw a sharp decline of 24% in production and 22% in sales due to low industrial activity and dipping business sentiment thanks to the worldwide slowdown. However, due to improvement in 2009-10, the sector grew 36% in production and 38% in sales, surpassing the peak of 2007-08 in terms of absolutes. Although exports showed improvement, it was lower than 2007-08, owing to the continuing bleak situation in the developed world. When assessed over a period of seven years, the sector registered an impressive 13% CAGR in production as well as sales. Exports have grown at a CAGR of 17%. Market share of CVs improved over the years, and with the prospects for growth in the Indian economy, the only way forward for this segment is upwards. In the LCV category Tata Ace is an innovation that has changed the tone of the trucking business. It was launched to not only counter competition from the three-wheeled goods carriers from Bajaj Auto, Piaggio, Mahindra and Force Motors, but to also boost the companys flagging LCV sales. It created a whole new mini sub-segment in India and filled the gap in the small commercial vehicles. In the Indian automobile context, light commercial vehicles have assumed a great degree of significance with the national economy poised for a greater leap forward. No wonder, all the leading automobile manufacturers are having their operations in the field of LCVs. The other leading automobile players like the Ashok Leyland and Swaraj Mazda too, are not lagging behind and they have their own aggressive expansion plans on show. Ashok Leyland is another major LCV player with products like Cargo 759 Tipper to boast of. With a wheelbase of 3200 mm and 5 speed synchromesh gearbox, it has got 4 cylinder diesel power engines. The Premium model of Swaraj Mazda has a wide cabin and wheelbase of 2815 mm, has 4 cylinder engine capacities while Cosmo, another of its LCVs, has an overall length of the vehicle 4789 mm. Dual Cab and steel High Deck are the other popular forms of Swaraj Mazda's range of LCVs in India. Eicher 10.60 and Eicher 10.70 are the other popular LCVs that are visible on Indian roads. A major competitor Mahindra & Mahindra launched a CNG variant of its mini truck Maxximo- priced at Rs3.99 lacs said that it is looking to expand customer base through its superior product offering. In the two years since Mahindra entered the mini truck segment with Maxximo, they have been able to build a good share in the market , which is currently dominated by Ace. They are confident that superior product offering, more customers will choose their product. In the last two years the Indian mini truck segment stood at 2.2 lakh units in the load and 68,000 units in the passenger segment. Mahindra share was 22% in the load segment while that of Ace was 68% . Maxximo had 29% share while that of Ace was over 60%. With the CNG variant of the maxximo, M&M is optimistic that it would be able to add more customers from Delhi and National Capital Region.The market of CNG vehicles the sub two tonne segment in Delhi-NCR was at 9,000 units in the last fiscal year. The market is expected to grow to 11,000 units this yearadding that the M&Ms CNG three wheeler Champion had over 60% share while Ace CNG was about 38%. The company is targeting transporters and corporate segment with the new product. Mahindra is committed towards sustainable mobility and the environment. The launch of Maxximo CNG is one more step that direction.

In the overall growth in the mini truck segment, he said the market grew by 18% last year but so far this fiscal it has come down to about 5%. Last year M&M had a growth of 36% in the mini- truck, which was much above industry growth and this year also they are confident that they will grow more than the industry.


Tata motors had conducted a detailed market analysis to understand their potential customer better. It found that there were two type of customers for Ace; cost sensitive customers and others who valued return on investment(ROI). The company targeted ROI customers who are willing to pay higher price but wanted low operating costs. The Ace provided excellent economy with an oil change required only for every 9,000 km when compared to three wheelers which required it for every 2,500 km. The vehicle travelled at a top speed of 65 km per hour, which enabled owners to make more trips in less time. The vehicle had a mileage of 18 km per litre with a high payload capacity. Also the customer segmentation is grouped as follows : Performance Sensitive Customer Interested in Status, brand image and speed Willing to higher price for better features Currently using cars or large Suvs to haul goods. Balanced Perspective Customers Wanted return on investment Owners Entrepreneurs Wanted comfort and convenience features Forced to purchase three wheelers as other products were above budget ROI sensitive customers Purchase based on lowest cost per mile of transport Not interested in non monetary purchase considerations Included fleet owners/operators and individual owners Acquisitions price constrained customers Lacked Credit No financial means even to purchase slightly expensive product They would preferably purchase 3 wheelers. Bottom of the Pyramid Could not afford the motorised vehicle Size of segment is unknown Involved in small business 6 With increase in propensity people move upwards

The target segment of Tata Ace is the Individual customer and the target customer being one who expects early ROI along with safety, comfort and status. This includes : Three Wheeler Owners Owners of trucks Trucking Fleet Owners First time LCV purchasers Customers with monthly income between 5-10 thousand rupees

Ace was positioned as a vehicle that offered the price, fuel efficiency, and manoeuvrability of a three wheeler but with the safety, durability, additional payload, and comfort of a four-wheeled truck. The deliberate positioning of Ace as a mini truck was also a important marketing strategy adopted by Tata motors. In the advertisements, the company did not focus on the looks of Ace lest their being a danger of it being perceived as a delicate vehicle that could not carry heavy loads. Instead, it was prompted as a mini truck and advertised with a caption Small is Big. The advertisement projected Ace as an elephant calf, standing beside the big mother elephant, to imply it was sturdy mini truck. They built their Value proposition as a High performance LCV with car like features. Also it is : Positioned as Chota Hathi A symbol of power A symbol of mini product A symbol of reliability A PRODUCT FOR ALL YOUR NEEDS and Savings


Product Quality: High standard Design: Sleek and sporty Brand name: Tata ace Services: Augmented service network closer to the operating routes Price Priced in comparison to three wheelers; Cost reduced through combination of using and modifying parts used by other vehicles from Tata motors

Promotion Creative advertising: Small is big as the catch line. Customers reviews in advertisements etc.

Place Locations: Cities, small towns and villages ,ruralurban belt in India

SWOT Analysis
A scan of the internal and external environment is an important part of the strategic planning process. Environmental factors internal to the firm usually can be classified as strengths (S) or weaknesses (W), and those external to the firm can be classified as opportunities (O) or threats (T). Such an analysis of the strategic environment is referred to as a SWOT analysis. The SWOT analysis provides information that is helpful in matching the firm's resources and capabilities to the competitive environment in which it operates. As such, it is instrumental in strategy formulation and selection. The SWOT Analysis of Tata Ace is as shown in the figure:

STRENGTHS 1. Strong brand name of TATA. 2. First mover advantage. 3. Good logistics management. 4. Good dealer network. 5. Provisions of finance to buyers. 6.6X2 LPG cylinders.

WEAKNESS 1. Less technologically advanced engine as compared to competitors. 2. Higher cost. 3. Availability of spare parts is limited. 4. Relatively less established market in southern part of India.

OPPORTUNITY 1.Further penetration rural market


[WO] STRATEGIES 4-3.Increase product awareness in southern part of India. 1-2.Bring in variants that are technically advance and confirm to EURO emission norms.

of 4&5-1.Rural market can be further penetrated by providing financing facilities and expanding dealerships. 2. Export opportunities to developed and emerging 1-2.Strong brand name of Tata can Latin American and further be leveraged to further explore African countries export markets, i.e., Internationalization. 3. High growth rate of LCV segment.

THREATS 1. Increased competition from existing players such as Mahindra and Mahindra, Piaggio, Eicher etc. 2. Further fragmentation of the market.



3&4-1.Good dealer network and 1. Introducing a new product in logistics management can help the LCV segment in Southern company to take on competition with market which doesnt affect the existing firms as well. customers pocket as well as meet the needs of the customer.


Since India has emerged as the second fastest growing economy after China, it has witnessed an increase in demand for CVs. Although there is some competition in the LCV market, the M&HCV segment is dominated by two companies which comprise the entire segment Tata Motors and Ashok Leyland. There are a few other LCV manufacturing companies, such as M&M, Eicher Motors, Swaraj Mazda and Force Motors. Also the peer competition is based on geographical segmentation. For instance in North, East and Western part of the country the product mainly competes with Mahindras LCV whereas in South India, its main competitor is Ashok Leyland. Despite the impressive performance, analysts expected stiff competition for Ace in the near future from all its competitors. The competition was also expected to force the price of Ace down. In 2006, after taking the beating from Ace , almost all three wheeler manufacturers and low end LCV makers had announced plans to roll out one-ton, four wheeler vehicles by 2008. Auto major Mahindra and Mahindra is gearing up to intensify competition in the mini truck segment with home grown rival Tata Motors, who is currently leading the market with its Ace models. Here is a list of players in LCVs in Indian market along with Tata Ace: Mahindra & Mahindra o o Maxx Maxi Truck, (payload of 900 kg) Alfa and Champion

Force Motors Ltd o o M4 Kargo King

Piaggio Vehicles India Pvt. Ltd o o Piaggio Quargo Ape Truk

Bajaj Auto Ltd. o RE 600 Ashok Leyland o Dost The Main Competitors being: Mahindra Champion Bajaj RE600 Ashok Leyland Dost



Particulars Category Engine Power (hp @ Rpm) Torque (Kgm @Rpm) CNG Capacity Body (L*W-Ft) Rear Axle Suspension Cabin Price (as of 2012) Ideal Loading Capacity (in kgs) Max Loading Capacity (in kgs) M & M Champion 3 Wheelers Single Cylinder (510 cc) 10.8 hp@2800 31.9 Nm @1800 8 Kg 6.32^4.75 NA Torsion Bar & Shock absorber ` Incomplete Cabin 2,46,000/675 1200 TATA ACE MINI Truck ( 4 Wheelers) 2 Cylinder (702 cc) 21 hp@ 3400 rpm) 50 Nm @2200 Rpm 12 Kg 7.21 * 4.81 Truck Like Parabolic Leaf Spring Car like Cabin 3,74,881 625 2000 Bajaj RE600 3 Wheelers Single Cylinder (416.6 cc) 10.1 hp@3000 Rpm) 27 NM@ 2200 Rpm ) N.A. 8.89 *4.33 N.A. Twin Shock Absorber Car like cabin 1,70,686 600 1000 Tata Advantage Better Stability, Ride comfort , Mini Truck Reliability , Longer life of engine More Power Better Pick up, Load carrying Capabilities More trip distance More Revenue Large Loading area to carry loads Better life of vehicle Suitable for more loading More safety Reasonable given the features Appreciable More carrying capacity


Primary Data is one which is collected directly by the researcher, for this purpose various tools were undertaken during the survey. Broadly we can classify them into INTERVIEW METHOD & OBSERVATION METHOD.

Our main aim of using this tool was to find out the customers satisfaction in respect of various segments, although Information regarding vehicles mileage, engine power loading capacity, braking & suspension system & overall performance were also collected with this tool.


Through this method we directly or indirectly observed the condition and recorded the events. The advantage of this method is that it cross checks the data and information, supplements and validates the data through interview scheduling.

Secondary data was that which was recorded earlier by us or other researchers for further use. The source of secondary data were as follows: Publications (directories/trade journals/ news paper etc.) Invoices for vehicle provided by the contact person in the firm. Market Data provided by the contact person in firm. Websites of Respective organisations Annual Investor reports of the companies


Tata Ace is very safe as compared to its competitor because it has gone through hard testing in order to ensure safety of the customers. Another advantage is that the need of servicing of Tata Ace is very less as compared to its competitors. the first service is required after it has crossed 10,000 km mark and the service can be done from any service station. Its mileage is much more than its competitors, which is 20 to 22 km/litre. It is comfortable and noise emission is very less compared to other four wheeler vehicles.


Most of the customers were satisfied with the performance, servicing and other attributes of the vehicle. However, there were some concerns regarding; The spare parts of the vehicle as their availability are not appreciable. Loading capacity was another concern as its maximum loading capacity was around 1.5 tons, beyond which efficiency of the engine gets affected and deteriorates the vehicle life. During the rainy season, engine shuts down due to water logging. There are issues regarding air filter and silencer as they both breaks down Suspension is also a concern comparing to the standards of Tata.



Rural economy is a dominant factor of Indian Economy. The Customers purchasing ACE are mainly from rural & Semi-urban area. Generally the customers buy the vehicle through Bank Loans. Mainly the vehicle is used for Transporting, load carrying and to move goods weighing less than 2ton. The vehicle is designed in such a way that it can be modified into a passenger vehicle. The traders, farmers, transporters, movers use this vehicle for transporting. The vehicle is economical & gives good mileage. As compared to other competitors vehicle, ACE is Economical, Sturdy, Load Carrier & has good shape. Also, it has low maintenance costs. After going through Tata Ace product and conducting rigorous survey from various consumers of TATA Ace and its competitor we came to know the various factors responsible for the success and failure of TATA Ace and their competitors. We also came to know the various perception of TATA Ace from the customer and the customer of the competitor brand in this particular segment. The future of Tata ace looks quite stable and solid as it already has a good market share in the LCV segment and it leads in the SCV segment. Though the company has to work out a few issues regarding the vehicle if they want to maintain the top spot from its competitors in the SCV segment. There is a threat from the existing products such as Ashok Leyland dost and Piaggio which are equally good and come from a strong product house. Also upcoming SCVs equipped with more features impose a threat to the market share for ace. Tata no longer has the advantage of being the first mover for sub one tonne SCV but it surely has a reputation and goodwill of TATA motors which should see them through in the coming years, provided they work out the issues regarding the vehicle and create more awareness among its target customers and creating a cultural link in this process. ACE has already proved itself as a multipurpose vehicle which can be used for various ventures as per its users wish. The company has to basically find out what the customer really needs their ace to do for them in order to fulfil their wants from the vehicle.