Tatas to rev up rural drive in cars

As Tata Motors gradually puts the building blocks in place for its passenger car business, one of its critical growth engines will be rural India.

“With these markets accounting for nearly 35 per cent of our sales, they will remain a core part of our strategy,” said Mayank Pareek, President, Passenger Vehicles Business Unit, at a recent meeting in Chennai.

It is also amply clear that the potential in smaller towns and villages is immense coupled with enormous levels of aspiration. In a country where the market penetration level for cars is barely 20 per thousand people, it is rural India that holds the aces.

Cities are bursting at their seams and even with higher levels of affluence, it would be difficult to solely bank on them for growth. And it is not as if customers in rural markets do not have enough disposable income given that they played a big role in keeping the economy afloat during the 2009 slowdown.

More importantly, brand Tata is still about offering affordable mobility solutions for Tier2/3 centres. The company believes it has some natural advantages in faster penetration due to its brand popularity in small towns.

“Our growth plan is focused on two pillars: product and geographies,” said Pareek. “In the first, we are present in only 59 per cent of the passenger vehicle market. Going forward, the plan is to cover those missing segments.”

As for the ‘geography’ pillar, the goal is to expand sales reach and volumes in rural areas. There are an estimated 4,500 tehsils in the country some of which are pretty sizable. To address this geographical spread is top priority for Tata Motors.

“We only have about 700 sales points and, given the size, width and diversity of India, need many more,” said Pareek. “In the next three years, we will more double the number of outlets to 1,500 and customers in small towns can access our products.”

The traditional brick-and-mortar business plan will go in tandem with digital retailing for the retail process. As he added, rural customers are as ambitious “if not more” thanks to smartphones. “They want exactly the same product that is sold in metros/big towns. Finance penetration in rural India is as good as in the big cities. More importantly, rural does not mean only farmers,” reiterated Pareek.

Tata Motors’ internal data shows that only about 30 per cent of its rural sales are accounted by farmers while the balance is taken up by shop owners, teachers, doctors and many others. The best way to reach out to them is to offer smart, contemporary products at competitive prices.

The Tiago was the first part of a turnaround journey and its success was the best piece of news coming after years of somnambulism following the Nano debacle. Sure, the Bolt and Zest preceded the Tiago but were still interim products.

The Hexa and Tigor are part of the aggressive product strategy, which clearly showcase a rejuvenated brand that still epitomises old fashioned values such as customer trust and loyalty. By the end of the day, it is these traits that have given that sheen to the Tata brand and something that Pareek and his team would like to leverage in the coming years.

COMMENT NOW