For Tata Motors the recently unveiled World Truck is significant. Addressing the medium and heavy tonnage categories, which have long stamped the company’s identity, the new range has Tata Motors standing tall among big players. “We are t he world’s fourth largest in trucks,” Ravi Pisharody, President (Commercial Vehicles Business Unit), says. The high sales were never in dispute. What used to be glaring in that elite world was the difference in vehicles. The emerging market character of Tata with its entrapment of low price points showed in the bare design, low technology and poor comfort that graced product line-up. The ruling economics did not even approve of a dedicated bus chassis.
Following Tata Motors’ Rs 500 crore-loss in 2001 and the arrival of Ravi Kant at the helm (he is now non-executive vice-chairman of the company after Prakash Telang became managing director in June 2009), the situation changed. Ace, the mini truck, showed what a tangy combination of innovative engineering and astute marketing could do. The range of bigger trucks was partly refined in 2002 through the EX Series; Daewoo’s commercial vehicle business was acquired in 2003 bringing the Novus medium and heavy trucks aboard, dedicated bus chassis and body built buses were introduced in 2005 and finally, there was the bus joint venture with Marco Polo in 2006. Yet, despite all this, mainstream Tata trucks continued to be poor cousins compared to foreign brands which had entered the Indian market to low volumes. As ever, Tata had the dominant numbers and relevant price points well covered. What it lacked was a truly modern flagship to showcase the stature that matched its volumes.
In retrospect, the bridge product was the Novus heavy truck, selling in India since December 2005. It represented the modern Tata truck till the World Truck was unveiled in late May 2009. The new product ranges in gross capacity from 10 tonnes to 75 tonnes, straddles 150ps-560ps engine horsepower, offers high driver comfort and is modular, thus capable of over 200 models across various applications. Fit and finish have improved courtesy learning from the company’s car division. Similar car industry habits show on the component sourcing front. Looks-wise, the World Truck is reminiscent of the Iveco Stralis. Officials say this has more to do with the European studio involved in design and less to do with the Tata Motors-Iveco dialogue. The old price point obsession has been replaced by life cycle cost. In its fullness, this paradigm embraces the cost of owning, operating and maintaining the truck and juxtaposes it with the consistent revenue from a truck that stays running.
To be fair, the media would recall life cycle cost as a Volvo-promoted sales pitch in the Indian commercial vehicle market. It is not that local companies didn’t have it. Saddled with hugely expensive products to sell in India, the Swedish giant had to consciously articulate it as merit where others chose to bundle everything into price point. The big difference now is that the language of life cycle cost is being spoken by the country’s biggest truck maker with a near 65 per cent market share. “We aim to have the best life cycle cost,” Pisharody says.
Unlike foreign players with similar products, Tata brings to the table intimate knowledge of Indian market conditions, vast reach and service infrastructure. Provided quality is at par, its ability to deliver attractive life cycle cost would be stronger than that of competition. Further, even as it talks of modest sales volume for the World Truck to start with, the company knows it has a leadership position to preserve. The clearest indication of this is the gross capacity range; 75 tonnes at heavy end and into intermediate truck domain of 10 tonnes at light. There is also a choice of engine and power train for price flexibility. Thus while we may have seen a typical heavy hauler in launch photos, the World Truck is actually a concept that can track specific applications right into lower tonnages. “Three thoughts shaped the product – we wanted to service various applications; we wanted to be the market leader and we wanted to improve our performance in markets other than India,” R. Ramakrishnan, Head (Sales & Marketing – Medium and Heavy Trucks), says. The company is bound to chase volumes for it has to recoup project investment and acquire scale for the otherwise expensive World Truck. Interestingly, this need not speed up model replacement as carrying cost for older models is low. That would mean a formidable line-up across price points staring at competition. But will all this fetch sales just now?
Currently the economy is tackling a slow down and truck sales have been hit. While India’s total commercial vehicle sales dipped 21.6 per cent in 2008-09, sale of medium and heavy trucks declined by 33.16 per cent. Unlike light vehicles, sale of heavy trucks is closely linked to GDP trends, road development and infrastructure projects. The media has reported 4,000 units as FY10 sales target for the World Truck (Tata does not confirm this). It compares with the over 5,100 units in eleven years for Volvo trucks sold in India. Unlike in flashier cars, truck marketing is usually low-profile and relationship-based. Tata’s priority would be to upgrade existing customers, especially fleet operators. It is exploring financing schemes such as long-term loans and operating leases. Product price hasn’t been disclosed and the full marketing strategy was forecast to play out by 2010. “Our first priority is the domestic market,” Pisharody says.
Competition is alert. In India, Volvo has expanded to include a joint venture with Eicher; MAN has tied up with Force Motors, Navistar International has partnered M&M, Daimler, previously aligned with Hero, would now invest alone, Scania is distributed by L&T. Not to mention Ashok Leyland and AMW. As and when medium/heavy truck sales pick up, the non-Tata numbers will grow. The same logic would work favourably for Tata, abroad. In new markets it will gain, in long-standing markets it will have to fight to gain. Companies are growing tentacles everywhere. Sample this: South Africa is a major truck export market for Tata. Volkswagen’s Brazilian truck unit ships vehicles there. This unit was bought by MAN, which has equity held by Volkswagen which in turn has equity in Scania along with MAN. Both Scania and MAN face Tata in India. Nothing is simple in such an octopus world; probably why Tata never shuts the door on alliances.
By - Shashi Ashiwal & Shyam G. Menon
A world of difference
The World Truck gives Tata Motors the stature it badly needed in the heavy vehicles segment..
— Shashi Ashiwal
On the move
Shyam G. Menon
For Tata Motors the recently unveiled World Truck is significant. Addressing the medium and heavy tonnage categories, which have long stamped the company’s identity, the new range has Tata Motors standing tall among big players. “We are t he world’s fourth largest in trucks,” Ravi Pisharody, President (Commercial Vehicles Business Unit), says. The high sales were never in dispute. What used to be glaring in that elite world was the difference in vehicles. The emerging market character of Tata with its entrapment of low price points showed in the bare design, low technology and poor comfort that graced product line-up. The ruling economics did not even approve of a dedicated bus chassis.
Following Tata Motors’ Rs 500 crore-loss in 2001 and the arrival of Ravi Kant at the helm (he is now non-executive vice-chairman of the company after Prakash Telang became managing director in June 2009), the situation changed. Ace, the mini truck, showed what a tangy combination of innovative engineering and astute marketing could do. The range of bigger trucks was partly refined in 2002 through the EX Series; Daewoo’s commercial vehicle business was acquired in 2003 bringing the Novus medium and heavy trucks aboard, dedicated bus chassis and body built buses were introduced in 2005 and finally, there was the bus joint venture with Marco Polo in 2006. Yet, despite all this, mainstream Tata trucks continued to be poor cousins compared to foreign brands which had entered the Indian market to low volumes. As ever, Tata had the dominant numbers and relevant price points well covered. What it lacked was a truly modern flagship to showcase the stature that matched its volumes.
In retrospect, the bridge product was the Novus heavy truck, selling in India since December 2005. It represented the modern Tata truck till the World Truck was unveiled in late May 2009. The new product ranges in gross capacity from 10 tonnes to 75 tonnes, straddles 150ps-560ps engine horsepower, offers high driver comfort and is modular, thus capable of over 200 models across various applications. Fit and finish have improved courtesy learning from the company’s car division. Similar car industry habits show on the component sourcing front. Looks-wise, the World Truck is reminiscent of the Iveco Stralis. Officials say this has more to do with the European studio involved in design and less to do with the Tata Motors-Iveco dialogue. The old price point obsession has been replaced by life cycle cost. In its fullness, this paradigm embraces the cost of owning, operating and maintaining the truck and juxtaposes it with the consistent revenue from a truck that stays running.
To be fair, the media would recall life cycle cost as a Volvo-promoted sales pitch in the Indian commercial vehicle market. It is not that local companies didn’t have it. Saddled with hugely expensive products to sell in India, the Swedish giant had to consciously articulate it as merit where others chose to bundle everything into price point. The big difference now is that the language of life cycle cost is being spoken by the country’s biggest truck maker with a near 65 per cent market share. “We aim to have the best life cycle cost,” Pisharody says.
Unlike foreign players with similar products, Tata brings to the table intimate knowledge of Indian market conditions, vast reach and service infrastructure. Provided quality is at par, its ability to deliver attractive life cycle cost would be stronger than that of competition. Further, even as it talks of modest sales volume for the World Truck to start with, the company knows it has a leadership position to preserve. The clearest indication of this is the gross capacity range; 75 tonnes at heavy end and into intermediate truck domain of 10 tonnes at light. There is also a choice of engine and power train for price flexibility. Thus while we may have seen a typical heavy hauler in launch photos, the World Truck is actually a concept that can track specific applications right into lower tonnages. “Three thoughts shaped the product – we wanted to service various applications; we wanted to be the market leader and we wanted to improve our performance in markets other than India,” R. Ramakrishnan, Head (Sales & Marketing – Medium and Heavy Trucks), says. The company is bound to chase volumes for it has to recoup project investment and acquire scale for the otherwise expensive World Truck. Interestingly, this need not speed up model replacement as carrying cost for older models is low. That would mean a formidable line-up across price points staring at competition. But will all this fetch sales just now?
Currently the economy is tackling a slow down and truck sales have been hit. While India’s total commercial vehicle sales dipped 21.6 per cent in 2008-09, sale of medium and heavy trucks declined by 33.16 per cent. Unlike light vehicles, sale of heavy trucks is closely linked to GDP trends, road development and infrastructure projects. The media has reported 4,000 units as FY10 sales target for the World Truck (Tata does not confirm this). It compares with the over 5,100 units in eleven years for Volvo trucks sold in India. Unlike in flashier cars, truck marketing is usually low-profile and relationship-based. Tata’s priority would be to upgrade existing customers, especially fleet operators. It is exploring financing schemes such as long-term loans and operating leases. Product price hasn’t been disclosed and the full marketing strategy was forecast to play out by 2010. “Our first priority is the domestic market,” Pisharody says.
Competition is alert. In India, Volvo has expanded to include a joint venture with Eicher; MAN has tied up with Force Motors, Navistar International has partnered M&M, Daimler, previously aligned with Hero, would now invest alone, Scania is distributed by L&T. Not to mention Ashok Leyland and AMW. As and when medium/heavy truck sales pick up, the non-Tata numbers will grow. The same logic would work favourably for Tata, abroad. In new markets it will gain, in long-standing markets it will have to fight to gain. Companies are growing tentacles everywhere. Sample this: South Africa is a major truck export market for Tata. Volkswagen’s Brazilian truck unit ships vehicles there. This unit was bought by MAN, which has equity held by Volkswagen which in turn has equity in Scania along with MAN. Both Scania and MAN face Tata in India. Nothing is simple in such an octopus world; probably why Tata never shuts the door on alliances.
(The writer is a Mumbai-based freelancer.)
news, Volve | Truck Finance | June 19, 2009 | 
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