Companies

Tata Motors bets big on automatics in Covid-19 times

Murali Gopalan Mumbai | Updated on August 11, 2020 Published on August 11, 2020

This will be fuelled by more personal driving and growing traffic, reckons marketing head

Vivek Srivatsa believes customer preference for automatics will grow in the passenger car segment as a result of changing behavioural patterns during Covid-19.

“My feeling is that demand for automatic transmissions will increase thanks to a combination of more personal driving and greater traffic on roads,” says Tata Motors’ Head (Marketing), Passenger Cars. This goes in line with popular perception that shared mobility will be impacted with the growing need for social distancing.

“Some of these trends are already visible. Covid-19 has forced a lot of change in behaviour right from masks to social distancing,” says Srivatsa. The other potential change on the horizon is “reverse urbanisation” which will accelerate as people may not be inclined to returning to cities even after the Covid-19 fear passes over.

“They will be happier back home and will benefit from digitalisation. This will change demographics and smaller towns could generate more employment and income,” he adds. The logic is that there could be new entrepreneurship models happening and people will be quite content staying away from cities.

In the process, the kind of cars they buy will also change. “People back in their home towns will want cars because of the shortage of public transport and reality of longer distances to cover,” reckons Srivatsa. As affluence levels grow gradually, these regions will play a bigger role in contributing to demand for cars.

Data also shows that the percentage of first-time buyers seeking cars above ₹6-7 lakh is dramatically on the rise. For instance, he elaborates, the compact sedan segment has 60 per cent first-time buyers while this is 50 per cent in the case of compact SUVs.

Complete makeover

With greater safety and emission norms, the price point for an entry-level car has now increased to ₹5 lakh. While affordable cars will doubtless have their share of buyers, there will be others in the market looking for options like compact SUVs, sedans and premium hatchbacks.

“Demand will not be skewed merely towards affordable hatchbacks as segments under ₹10 lakh will see growth too,” says Srivatsa. Likewise, while petrol will increasingly grow its presence in compact SUVs, diesel will still be the fuel of choice in larger versions.

Tata Motors is hopeful that all these changes will act as favourable tailwinds in boosting sales. As Srivatsa says, the company has pulled out all the stops in recent times to give a complete makeover to its range while focusing on drivability, design and safety.

Attracting young customers

“The average age of our range today is just 2.5 years old and we have been working hard on improving brand perception,” he adds. The good news is that where the average household income for Tata customers was 10 per cent lower than industry four years ago, it is about 5 per cent higher today.

Similarly, the average age of buyers for Tata cars is now on a par with industry and not higher as was the case earlier. “Younger customers are more favourably inclined towards our offerings,” says Srivatsa. The average revenue per car has more than doubled too which is welcome news.

Some of the errors of the past are also being remedied as in the case of Harrier, which initially did not offer a complete package especially in terms of an automatic option. This has now been set right and, today, the automatic accounts for 70 per cent of Harrier sales.

“We have learnt from the past and are implementing lessons for the future,” says Srivatsa, while adding that the Nexon is growing from strength to strength while the Altroz, still due for an automatic, is meeting customer needs in key parameters.

The Tata Motors marketing head is also upbeat about digitalisation in the retail space. “There will be a better spread across the country, thanks to digital and negotiations can happen online. Understanding customers will be different and being tech-savvy is going to be an absolute imperative,” says Srivatsa.

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Published on August 11, 2020
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