Tata Motors: Remaining Competitive in India

Ammar Photo

Ammar Master

One of India’s major automakers, Tata Motors, is struggling in its home market as buyers are attracted to the competition’s products. Tata’s upgraded products lack excitement and the Nano’s current slump has brought up a question about the company’s ability to connect with young and aspiring consumers in India.

During the past few years, more competitors have been entering the critical sub‐compact car market, and Tata may have over-emphasized the importance of its Nano and the role of the model in the company’s portfolio.

Tata was riding high on expectations of a mass migration of India’s two‐wheeler buyers to the affordably priced Nano. When this did not happen, the Nano was in a position that failed to win buyers from stronger models such as the Maruti Suzuki Alto and Hyundai i10. Continue reading ›

The Politics of Diesel in India are Complicated

Ammar Master

It is never easy to run a government in a socially and economically sensitive society, especially when that government is dependent upon a number of allied partners with diverse and often different viewpoints on almost every issue.

This is the precarious position of India’s government, which is led by Manmohan Singh, United Progressive Alliance (UPA), after his administration decided to implement a number of long overdue reforms including a 14% hike in diesel fuel prices in mid-September.

A multi-party coalition has broken apart after a major partner, the Mamata Banerjee-led Trinamool Congress, decided to withdraw its support for the current government. Ms. Banerjee is the same leader who protested against the construction of Tata Motors’ Nano car plant in her home state of West Bengal, which forced the automaker to abandon its production plans in the state.

Admittedly, Ms. Banerjee is not alone in this latest disagreement. Several other opposition parties have also criticized the government for its decision to not only increase the price of diesel, but also to allow foreign direct investment in the retail sector. On the streets, opposition parties and trade unions have protested across India against the government. Schools were shut, while road and rail transport were disrupted in several areas. Continue reading ›

OEMs in India Plan to Invest in Popular Diesel Powertrains


Ammar Master

Vehicle makers have revived their plans to invest in diesel engine manufacturing facilities in India after the Indian government decided not to implement any additional tax on diesel-powered vehicles in the Union Budget 2012‐13 that was announced earlier this year. The decision to further invest in manufacturing is being driven by the strong demand for diesel-powered vehicles, which account for nearly half of all passenger vehicles sold in India, suggests Ammar Master, senior analyst, LMC Automotive*. Excerpts from a recent perspective in partnership with J.D. Power Asia Pacific on diesels in India:

“The main reason behind the strong demand for diesel-powered vehicles is the cheaper price of diesel at the pumps. In fact, the price gap between diesel and gasoline (petrol) has widened by as much as 40% since the government deregulated gasoline in June 2010.

As a result, the unexpected surge in demand for diesel vehicles caught India’s largest vehicle maker Maruti Suzuki off guard and the company lost sales. Continue reading ›

Luxury Brand Competition gets Tougher in China’s Auto Market

Tim Dunne

Luxury brand automakers and dealers operating in China—who discovered their own metaphorical gold mine in the country’s automotive market these past few years—may be starting to find mining their mother lode has become more difficult.

According to LMC Automotive*, sales of luxury vehicles in China have, on a percentage basis, grown faster than the total market in China during the past few years, with 2011’s luxury-vehicle sales totaling nearly 600,000 vehicles, up 30% compared to a year earlier (and much higher than the total industry growth rate of 10% in 2011). A booming economy, rapid individual wealth creation, and a relative dearth of luxury-vehicle inventory from which to choose have created an enviable vehicle seller’s market in China. Dealer gross profit margins on a single vehicle frequently range from US$10,000-US$30,000, according to J.D. Power research. Continue reading ›

Mini Car Competition Intensifies in India

The introduction of Hyundai’s all-new small car, the Eon, which was previously known by its code HA H800, will heat up the mini car battle in India. The Eon is expected to be a strong challenger to market leader Maruti Suzuki’s Alto. The Eon, an entry-level hatchback aimed at capturing first-time car buyers in India, was developed over 4 years at a cost of INR 9.56 billion (US $181 million).

In order to meet the requirements of car buyers in this growth market, Hyundai Motor’s research and development team in Hyderabad worked with Hyundai’s engineers in South Korea to design and develop the Eon exclusively for India. The result is a model that is stylishly designed and promises fuel economy of 21 kilometers per liter (equivalent to 13.05 miles per liter or about 79.38 miles per gallon)under test conditions. Powered by an 814 cc 3-cylinder gasoline engine, the Eon is also competitively priced from INR 285,309 (US $5,400) for the base model Eon D-Lite to INR 396,262 (US $7,500) for the top-end Sportz version, which has additional features such as keyless entry and a driver air bag. Continue reading ›

New-Vehicle Buyers in India Engage Family, Friends in Purchase Experience

Mohit Arora

In India, nine out of 10 new-vehicle buyers shop with a family member or friend, which can make it more difficult to satisfy these buyers during the sales and purchase experience in comparison to buyers who shop alone for a new vehicle, according to our 2011 India Sales Satisfaction Index (SSI) Study, which is based on responses from 6,840 new-vehicle owners. In addition, the study finds that new-vehicle buyers who are accompanied by family or friends are more apt to shop across brands and dealerships.

It’s evident that family members are trusted advisors throughout the purchase process for many new-vehicle buyers in India, and this is especially true when customers are buying their first new vehicle. These first-time new-vehicle buyers, who bring family members or friends to the dealership, tend to be more critical of the sales experience than are return buyers.

Among new-vehicle buyers who shop with family members, satisfaction with the sales experience averages 823 on a 1,000-point scale. If they shop with a friend, the satisfaction score drops even further—averaging just 807. However, buyers who visit the dealer alone are more satisfied—the satisfaction score averages 835. Continue reading ›

Will India’s Plan to Revamp Land Acquisition Laws Hinder Automakers?

Ammar Master

The issues in acquiring land for large-scale industrial projects in India are not new. And it is widely accepted that India’s archaic Land Acquisition Act of 1894 needs a major overhaul. With general elections to be held in a little over two years, politicians have started to woo India’s 500 million farmers—a strong voter base—with changes and proposals to the current land acquisition policies.

In recent months, states such as Uttar Pradesh* have revised their land acquisition policies. In West Bengal*, the new Chief Minister, Mamata Banerjee (who carried out Tata Motors’ Nano project), is implementing a new Land Rehabilitation Act, which would allow the state government to return 400 acres of disputed land from Tata Motors back to farmers. The automaker is now fighting the matter legally. Continue reading ›