Tata Motors sees auto sector recovering only from second-half of next fiscal

The automobile industry may see a recovery in growth from the second half of the next fiscal year onwards, said Guenter Butschek, CEO and MD, Tata Motors . The completed transition to the BS-VI emission norms, the expected acceptance of BS-VI solutions by customers, as well as the expected recovery in the economy are the reasons he cited.

Addressing reporters on Thursday, Butschek said there is a need to be cautiously optimistic. “If I just take these three elements with reference to the uncertainty in the market, I think we have good reason to stay somewhat positive and confident that in the second half of the next fiscal, we are going to see a structural recovery,” he explained.

Talking about the prolonged slowdown the automobile industry has been privy to so far, he described the nature of the downturn in the sector an overlap of two “almost reinforcing challenges”, one being the cyclicality of it, and the other being the structural reasons for the downturn.

The cyclicality of the downturn will abate when the GDP increases, when there is more disposable income with consumers, as well as with the recovery of the banking sector, he said. The structural challenge is the one which makes any kind of recovery very unpredictable, he added.

As far as competition is concerned, he said that even in the face of subdued demand, where even established products were facing the brunt of it, the new launches in the past year managed to attract attention. “These new products, actually were selling very hot,” he remarked.

He added that now he is about to complete his fourth year in the country, after comparing this with his experience so far, this year has seen significant development as far as customer behavioural trends are concerned.

“India is a highly diversified market. And I think the last year has shown us that in order to play in such highly diversified market with differentiated dynamics, you need to apply a micro market strategy. And as we looked into it, we realised that the diversification as well as the micro markets is a much more differentiated and complex play than as it might look in the first instance,” said Butschek.

In the urban market, for instance, apart from a changing consumer behaviour, which involves a shift from an ownership model to a shared mobility model, there is also a growing affinity towards factors like safety, comfort and connectivity. There is a need for more bespoke products, he explained.

Customer segmentation

Talking about customer segmentation, he said that customers are becoming more oriented towards tech features when it comes to their purchase decision.

“One of our learning is a key differentiation for the future is the ability to provide tailor made solutions for all of these micro segments. And these micro segments are multiple...I think we need to become much more customer oriented and (there is a) need to serve the persona of the customer in a much better way – providing customised solutions,” he said.

To address all these factors, the company would be focussing on connectivity, electrification, safety as well as shared mobility, going forward, he said.

Talking about connectivity, he said that the car needs to become the part of the extended digital ecosystem of the customers. As for electrification, he said that electric has the potential to become mainstream.

When it comes to shared mobility, there is a need to find the right solution where you need to crack the code on how to run it profitability, he said. As for safety, it needs to brought to the structure of the vehicle.

BS-VI products

Tata Motors also announced that it will showcase 26 vehicles at the upcoming Auto Expo 2020 in Greater Noida. It also said that it will commence the introduction of a new range of BS-VI products in the passenger vehicle segment from this month onwards. The showcase at Auto Expo 2020 will include four global unveils, as well as displays of 14 commercial vehicles and 12 passenger vehicles, the company said.

Butschek said that the company’s pavilion at the Auto Expo will be centered around the theme ‘Connected India: Responsible and Sustainable Mobility Solutions’.

“This theme will bring alive our future focus on CESS, which is – Connected, Electric, Shared and Safe. The future of efficient, green, sustainable mobility solutions needs to translate into reality. As a responsible corporate, we are doing every bit to contribute to this agenda and are gearing up to bring a new generation of products faster to market. We are excited to unveil our extensive range of future portfolio at the Auto Expo 2020 which are not only BSVI ready, but are designed and developed to truly enhance the value proposition for our aspiring customers,” said Butschek.

Tata Motors also said that it is building a common connected vehicle architecture, which will serve the entire portfolio across commercial, passenger and electric vehicles, in a bid to enable the extended digital ecosystem of its customers.

The upcoming BS-VI transition, set to be enforced from April 1, 2020, has been the single largest focus area for Tata Motors, the company said. It established an Advance Power Systems Engineering Tech Center at its Engineering Research Center (ERC) Pune, which has played a key role in engineering, testing and developing powertrain solutions for its product portfolio, including electrification, it said.

“The Tata Motors team has tirelessly worked towards a seamless transition to the BS-VI regime. From January 2020 onwards we will be introducing over 100 lead models with over 1,000 variants. These will cover options of powertrain combinations, body styles, chassis configurations plus technologies imbibing connected, electric, shared and safety,” said Rajendra Petkar, President & CTO, Tata Motors.

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