Tata Motors bets on rural markets to drive growth

Nandana James Mumbai | Updated on July 12, 2019 Published on July 10, 2019

At a time when the automobile industry is reeling under the impact of a severe slowdown, Tata Motors is betting on rural markets and is planning to deepen its reach in the segment.

It will also be focussing on product interventions, increased retail push and enhanced marketing initiatives on its digital platforms to bolster growth, said SN Barman, Vice President, Sales, Marketing and Customer Support, Tata Motors.

The company also wants to provide private leasing facility to its customers, keeping in mind the changing buying pattern and the preference for shared mobility.

Presently, around 40 per cent of Tata Motors’ sales come from rural areas. “My take would be that the retail (sales) growth in rural (areas) is going to be higher than the retail (sales) growth in the cities,” Barman told BusinessLine. Now that the rural market has moved past the uncertainties wrought by the elections and with the monsoons expected to stabilise, the company’s production will go up from the second quarter onwards, he said.

Tata Motors currently has more than 500 emerging market outlets in Tier-II and -III cities, with plans for more. Apart from this, it is also working on setting up mobile showrooms and rolling out service vans. Rural sales executives will also be deployed, he added.

Barman said that the rural areas — which have over one lakh higher secondary government schools and an average of 10 teachers per school — hold potential that the company wants to tap into with “ very niche marketing”.

Currently, the penetration of cars among teachers in these schools is around 2-3 per cent, he said. “The best part about what is happening in Tata Motors is that our products are quite accepted by people. What was missing was the reach. That’s what we are working on today — how to reach one lakh schools,” said Barman.

Barman said that the focus on rural markets is due to the rising purchasing power and aspirations of people in these areas.

Meanwhile, in the metro cities, with alternative modes of transportation, issues relating to parking and other factors, the idea of owning multiple cars is gradually losing favour, he said.

The company is also working on increasing its digital conversion rate. Around six months ago, its digital conversion rate was 1-2 per cent, and it has now gone up to 5-6 per cent, said Barman. The company is working to improve this rate further. It also plans to open around 2,000 digital showrooms soon.

Tata Motors had registered a 27 per cent y-o-y fall in its domestic passenger vehicle sales to 13,351 units in June, as against the 18,213 units it sold in the year-ago period. But, according to Barman, the retail sales scenario as a whole is “not as bad” as the offtake scenario or the sales to the dealers suggest. Barman said that Tata Motors has taken a “conscious call” at reducing the dealer stock. He said that six months ago, Tata Motors’ stock at its factories used to operate at 20-25 days, and now it is at 6-7 days.

Published on July 10, 2019
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