Tata Motors plans to launch 6 utility vehicles across segments to make a strong comeback

Friday, Mar 20, 2015

Tata Motors, the first local auto maker to launch a sport utility vehicle in India and owner of the company that manufactures the famed Land Rover SUVs, is getting ready to make a strong comeback into the segment that is growing at a quicker pace than the overall automobile market.

It plans to launch as many as halfa-dozen utility vehicles across segments over the next three-four years, say people with knowledge of the matter, aiming to reclaim the space it lost to Mahindra & Mahindra over the past decade-and-half. The range would include vehicles right from compact SUVs meant for the urban buyer to rugged offerings targeting rural markets and premium crossovers.

These are among the eight-nine vehicles including cars it plans to launch. A Tata MotorsBSE -1.03 % spokeswoman said the company doesn't comment on future product plans. Tata Motors, which created the affordable urban SUV segment in India with Safari and rural UV with Sumo, lost the plot to M&M's Scorpio and Bolero in the past decade. From having a quarter of the market about 7-8 years ago, its share in the local utility space has come down to a dismal 5% in the April to February period of FY15. While the utility-vehicle (UV) market has more than doubled since FY07, the company's volume shrank to half.

While attempts to reignite the Sumo and Safari range with new-generation products have had little impact, its big bet of 2009-10, the Aria crossover, also failed miserably. The company's renewed focus on UVs is primarily because of lower competition in the segment. It is also a higher margin business, and for the company to make a comeback and hit sizeable volumes, UVs will offer a faster path to recovery, say experts. "Tata Motors is playing catch up and therefore, there has to be a massive push on SUVs.

It is a timely and a right move, as the segment is hot right now and offers higher margins," said Hormazd Sorabjee, editor of Autocar India. "But they must not bite off more than they can chew and they should rationalise their portfolio." Abig plus for it is that it can leverage UK unit Jaguar Land Rover's expertise, which will stand it in good stead with competitive scenario intensifying, Sorabjee said.

One of the vehicles it is planning to introduce, a compact SUV based on the Nexon concept, will indeed look like a mini Evoque, say people in the know. The 5-seater will be pitted against the Ford EcoSport and is expected to hit the market in the festive season of 2016. But the first of the mark will be chairman Cyrus Mistry's own baby, a premium SUV called Hexa, which was showcased at the recent Geneva International Motor Show.

Its launch is planned for the first half of 2016. The company is also working on regaining the rural market share by introducing a rugged SUV, called Raptor. Then there are joint products between JLR and Tata Motors, called the Q501 and Q502. It is also considering a 7-seater version on the X1 platform, called X107, and a 9-seater on the X6 platform, codenamed X602.

The new range along with the existing vehicles — Sumo, Safari, Storme and Aria — will make Tata Motors have probably the largest portfolio of UVs in India to rival Mahindra, which itself has many launches lined up in 2015. "All homegrown companies are going to face intense competition from MNCs, but I think Tata Motors is better positioned over M&M," said Autocar's Sorabjee. "M&M is more vulnerable in the long run, as they are too dependent on SUVs alone, whereas for Tata Motors, the risk is more widely spread."

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