A leader in the commercial vehicle (CV) segment with over 45% market share, Tata Motors has been a major trendsetter in the Indian automotive industry. With pioneering products catering to specific needs of the changing market, the company has managed to stay ahead in the game through its future-ready range of vehicles.
When the businesses were battling the disruptions caused by the Covid-19 outbreak, Tata Motors was busy bringing out new vehicles into the market while achieving the feat of launching 21 CVs simultaneously in October 2021 alone – something that reaffirms its agility and adaptability in the face of the pandemic.
As the automotive industry gets ready for a new world full of disruptions and innovation – all aimed towards promoting sustainable mobility, the CV manufacturer is well poised to lead the change in India as it remains one of the early adopters of newer, cleaner and greener technologies – be it electric vehicles, CNG or hydrogen fuel.
In an exclusive interview with Manufacturing Today, Tata Motors Executive Director Girish Wagh unravels what drives the CV manufacturers to constantly up the bar in this highly competitive market while promoting innovation and technological breakthroughs that can change the course of India’s CV industry in years to come.
Here are the excerpts:
How do you assess your current standing in the CV segment in terms of market share, recent performance, and growth prospects?
Tata Motors is the most trusted and the largest CV manufacturer in the country and enjoys a market share of 45.4% as of Dec 2021, thanks to our superior and robust vehicles and world-class after-sales solutions. We have been gaining market share in all of our segments viz. SCV, I&LCV, M&HCV and passenger CV.
Our top priority remains to deliver best-in-class operating economics, superior comfort and convenience and enhanced connectivity across our range of vehicles. As a part of the regulatory transition in April 2020, we launched our all-new range of BS6-compliant vehicles across the range (sub 1 tonne to 55 tonnes and 10 seater van to 69 seater bus). Our BS6 range has been well accepted in the market and is being endorsed by customers and other stakeholders alike.
During this year, lead indicators have shown promising growth in the last two quarters, and the current consumer sentiment index is also improving gradually, indicating a stronger and healthier finish to the fiscal for the CV segment. The revival of the economy in the post-lockdown phase and the Government’s increased focus on the construction and mining sectors have boosted the demand for M&HCVs in recent months. In parallel, the growing logistics, e-commerce and FMCG have been driving demand in the last-mile transportation and I&LCV segment.
We expect the domestic CV industry in FY22 to close with an overall growth of ~20% over FY21. Going forward in FY23, the Government’s infrastructure spending will lead to an increase in demand across segments and applications. Sectors such as e-commerce, FMCG, FMCD, construction, mining, steel and cement will continue to drive demand in the M&HCV and I&LCV segments. Similarly, the SCV segment is expected to continue doing well on the back of resilient demand from the agriculture, dairy and e-commerce sectors.
How do you assess the recent announcements made in the Budget and their impact on the automotive sector?
The Government’s focus on infrastructure projects and fiscal support for capital expenditure to State Governments, along with an increase in economic activities through the Gati Shakti project, will lead to growth in the M&HCV segment. The Gati Shakti scheme includes mega projects such as the development of roads, railways, airports, ports, mass transport, waterways, and logistics infrastructure, which will be favourable for the construction and allied sectors.
The announcement in the Budget to expand the national highway network by 25,000 km in FY23 is expected to boost demand for cement, steel. Further coal and mining activities will stimulate growth in demand for commercial vehicles. Other Government schemes such as Scrappage Policy and Performance-Linked Incentives (PLI) will be vital for the overall CV sector and its growth prospects.
You have been a pioneer in some of the segments. Tell us briefly about the approach and the R&D process you follow for developing any new products.
We have a well-defined, stage-gate New Product Introduction Process, which forms the core of all new products and technologies that are introduced in the market. Products are designed and engineered based on current and emerging requirements of the customers, using inputs from Voice of Customers and carefully-crafted Product Attribute Leadership Strategy (PALS) derived from the customers’ needs and drivers of their purchase decision making.
Our product portfolio is periodically updated, and any white space and emerging requirements are captured based on environment scans, surveys and existing customer insights captured in our system. Each identified new opportunity then goes through rigorous evaluation to meet market requirements and business cases at each gateway from concept to launch.
A comprehensive technology roadmap is also prepared to address key emerging trends and is integrated into vehicle programs, as per market requirement and opportunity. For example, Tata Motors started work on electric and hybrid buses almost a decade ago, which allowed us to quickly introduce and take the lead in the electric bus opportunity as the market matured. This approach has helped Tata Motors stand out with its multiple segment-creating and segment-first products and services.
What has been the key differentiator in achieving this success for your commercial vehicles, many of which lead the market?
Our approach of seeing opportunity in every challenge and moving with agility has helped us make the most of every regulatory change and disruption. We see these challenges as value-enhancement opportunities for the customer. For example, Tata Motors looked at the BS6 transition beyond just compliance and took on the task of completely reimagining and re-conceptualising its widest range of commercial vehicles for the end consumer, thus enhancing competitiveness. Today, our product across the range offerings are leading the market by delivering best-in-class operating economics, superior comfort & convenience and enhanced connectivity.
Another key deciding factor for commercial vehicle customers to opt for Tata Motors CVs remains the best-in-industry after-sales services the brand offers. These include fleet management solutions, annual maintenance packages, Tata Alert roadside assistance service and resale for commercial vehicles (TATA OK) under the Sampoorna Seva 2.0 initiative. Tata Kavach also ensures that all accidental vehicles insured under Tata Insurance are repaired within 15 days. This is delivered through Tata Motors’ extensive dealership and service network of over 2500+ touchpoints, manned by trained specialists and backed by Tata Genuine Parts.
The Indian automotive industry was downhill even before being hit by the pandemic. How is the company dealing with the challenges posed by the pandemic?
The rising concerns on safety during the pandemic led to an inevitable need for digital contactless technologies to continue business operations. Tata Motors quickly adapted its processes to facilitate this critical emerging need of its customers and channel partners and deployed focused and agile digitalisation interventions across the value chain. The online sales platform was launched to enable customers to browse, select, and book a vehicle from the comfort and safety of their home/workplace. We also increased focus on digital campaigns to facilitate the customers to have quick access to product/service information with limited field intervention by channel workforce. Furthermore, the company also reinforced and leveraged digitalised front-end sales processes through Go-To-Market Excellence.
Some of the other key steps taken to help our consumers better included the announcement of an extension of warranty as well as Tata Suraksha annual maintenance contracts for all customers globally. We also co-developed business continuity plans for all our dealer partners across the country to help them tide over the crisis.
On the supply side, responding to the challenging situation of the semiconductor shortage, our teams focused on developing alternate options, validating and certifying them for implementation within record time. Leveraging in-house capabilities, agile sales and operations planning process, and support from strategic suppliers, Tata Motors managed to minimise the impact of semiconductor shortage without any major production loss. Agility and flexibility were two clear themes that helped us ramp up better and enabled us to grow ahead of the industry (Tata Motors CV grew by 48% Apr-Dec 21 vs industry growth of 30%).
How will adopting new technology and alternative fuel impact the CV segment?
Tata Motors has always been at the forefront of the Indian automotive industry’s drive for clean and green emissions and has taken a considerable lead in the various alternative fuel segments such as hydrogen fuel cell technology, foray into CNG and LNG space as well as has been a leader in the electric mass mobility space, with 645 e-buses delivered till date.
This year, the demand for CNG-powered CVs has seen a sharp rise due to the increasing differential between CNG and diesel prices, driving the operating economics in favour of CNG vehicles. The improving availability of CNG fuelling stations across the country has further accelerated this shift. The salience of CNG vehicles in the I&LCV and SCV has reached ~44% and 33% compared to ~16 % and ~5%, respectively, in FY21. In the overall Tata Motors portfolio, CNG accounts for ~16% of total CV sales year-to-date FY22 compared to 3.4% in FY21.
You recently won an order of 15 hydrogen fuel cell buses from the Indian Oil Corporation Limited (IOCL). Tell us how you are developing products that run on hydrogen and alternative fuel?
We have been working on developing fuel cell technology over the past few years. Tata Motors is the first Indian OEM to showcase a fuel cell bus at various public forums like Auto Expo and the first to bag a contract for Hydrogen Fuel Cell buses. We conceptualised a project with the Government of India as part of the Technology Development and Demonstration Program (TDDP) and collaborated with the likes of ISRO during its development for system integration, testing, and certification.
The team also developed hydrogen handling and onboard storage capability, along with an associated safety system. Tata Motors set up a fuel cell power system test lab with all the safety measures during the development process and acquired the confidence and know-how needed to build FCVs.
While Hydrogen fuel cell technology is still at a very nascent stage, the government incentives and localisation of core aggregates are likely to reduce costs and improve the overall economics of fuel cell technology. A surge in demand for this technology is expected towards the second half of the current decade.
As per the contract, we will deliver the 15 Hydrogen fuel cell buses to IOCL in the next two years.