Tata Motors steps on the gas even as truck sales soar

As President of Tata Motors’ Commercial Vehicle Business Unit, Girish Wagh has little reason to complain with the industry seeing its best growth in recent times.

Yet, he is categorical that it is important not to let complacency come into the system and, instead, constantly push the envelope to stay ahead. “What we have been doing in the last year is to continuously improve the cost of operations of our products,” elaborates Wagh.

This has included a sharp focus on enhancing fuel efficiency, not only in terms of when the vehicle gets certified, but also understanding various duty cycles. The products are then customised for that particular duty cycle as well as the customer concerned.

In addition, Tata Motors has deployed Dronas, a team of experts in specific fields, to follow up on fuel-efficiency complaints. According to Wagh, these Dronas accompany the customer/driver sometimes for over 2,000 kilometres to understand the driving pattern. “In many cases the solution is given then and there.

The customer is told what to do to improve fuel efficiency,” he says. By the end of the day, the focus is on constantly attempting to understand customers better not only on product, but after-sales too. Prices of spares have also reduced in the drive to improve overall cost of ownership.

Customer experience

“There has been an overall drive to improve customer experience across vehicle segments. We need to do this if we have to stay relevant,” reiterates Wagh. The message is loud and clear: Tata Motors could be the market leader but it is important to keep its feet on the ground and not get carried away.

There is also a greater sense of becoming more proactive in reaching out to potential end-users and figuring out what their requirements may be. For instance, this could include a category like contractors bidding for road development projects where there is now greater “proactive engagement” in understanding what they are doing and how Tata Motors can help out in terms of spares, product modifications and so on. As Wagh says, this will go a long way in creating top-of-mind recall and even help bag new orders.

“We just cannot afford to be complacent especially in areas like costing,” he adds. What began with meeting challenging goalposts like Bharat Stage IV emission norms last year “is being continued into this year” while adding value and reducing costs. Today, there is a better understanding of what needs to be done to stay ahead of the curve.

In addition, there have been functional recasts carried out to improve product focus and ensure faster decision making. After all, Tata Motors has a huge range right from the small pick-up to the gigantic 49-tonne truck. For better managerial alignment, there are now four product lines with exclusive heads to take business decisions.

“These guys spend a lot of time in the market, on engineering work and ensuring that the supply chain is aligned perfectly,” explains Wagh. As a result, there is a greater sense of ownership while strengthening the functional organisation (sales, purchasing, engineering, after sales) with leaders focussing on their specific areas. There is also more discipline in daily management going right up to the dealership level.

Passenger cars’ takeaways

Wagh was in the company’s passenger car business for many years and played a key part in the Nano’s evolution. Have those lessons come in handy for his new role in commercial vehicles? Beyond the cost focus and frugal engineering mantra, he believes some aspects in passenger vehicles like refinement and craftsmanship (especially in buses) will also be brought into commercial vehicles, albeit gradually.

“Our product development process was more mature in passenger cars because of inputs from Jaguar Land Rover,” says Wagh. All these inputs have been taken into the commercial vehicle business “as a big pill where the outcome will be seen as we go ahead”.

For now, the priority is to work relentlessly on new product development, innovations, service/value and cost reductions. There are five-year product plans that have been formulated with a greater sense of responsibility and focussing on a clear roadmap.

In the midst of this are occasional disruptions like the recent announcement on multi-axle loading where the Centre has advocated changes in carrying capacity. Wagh says this would mean “reengineering, revalidating and re-certifying” all vehicles, which will include careful examination of the entire anatomy right from steering, wheels and brakes to the engine and drivetrain.

“The organisation is on its toes and working to comply with this,” he adds. As in the case of BS IV, this is another disruption, which obviously the industry can do without especially at this stage when it has its hands full coping with the BS VI deadline from April 2020.

Wagh confines himself to saying that any company would welcome a carefully laid-out policy roadmap instead of disruptions. He believes it is a bit too early in the day to predict if the new loading rule will affect demand.

Tippers are anyway overloaded so there should be no impact. On the other hand, both the big fleet owner and retail customers who resort to overloading are the categories that need to be studied in greater detail. “Perhaps there will be replacement demand with this new ruling and what kind of impact this will have on buying will vary from one segment to another,” says Wagh.

On a happier note, truck sales continue to be brisk thanks to infrastructure development especially in road-building and affordable housing. The consumption story is also going strong in segments like cars, two-wheelers and consumer durables coupled with the shift towards organised retail where small commercial vehicles are increasingly being used to home-deliver products.

The GST effect

The Goods and Services Tax introduced last July has also played a big role in the growth story. “In our case, we distribute both cars and small CVs through trucks.

Our data shows that delivery times have reduced by 20 per cent,” says Wagh. While this is specific to Tata Motors, feedback from other transporters suggests that there has been an overall 10 per cent reduction in time.

“With this data, one can safely say that there has been a distinct improvement in transportation time. The focus on road-building and removal of physical barriers after GST has definitely helped. Yet, one of the bottlenecks is the time taken for loading and unloading, which however has nothing to do with GST,” says Wagh.

The Tata Motors’ CV chief is also categorical that there will be no dumping of vehicles as “it is not good for market health in the longterm”. In his view, customers have become smarter and look for the overall value of a CV and not just the price. “Of course, there are some who do negotiate with the initial price alone but we take our own calls whether to engage with this kind of buyer or not,” he adds.

While the sales momentum will continue to grow during the course of this fiscal and the next, it remains to be seen how demand will be impacted in the BS VI era when vehicles will become more expensive.

Wagh concedes that any price increase will be a challenge but the inherent demand “will still be there” because of tailwinds like infrastructure, growth in agriculture and manufacturing, etc.

“We need to understand how the transition will be less bumpy for transporters since his business case will be quite different.

Even BS IV saw a significant price increase but there was demand anyway. By the end of the day, the CV industry is cyclical and we should be mindful of that,” declares Wagh.

COMMENT NOW