To begin with,
here is a disclaimer – I am not an auto
expert, not that I think anybody is. Experts, in my opinion, are those who have
to make a little less effort to take away your money. I am just a wannabe
investor who due to noise (in news, of course) got interested in Tata Motors.
I made an
investment into Tata Motors DVR because of two things - their strategy of
launching two cars every year till 2020 and opportunities with Jaguar to make a
significant foray into Indian luxury car markets. While latter might be offset
with slowdown in China, I assume that at least one of their launches will
dominate the market. Why? I don’t know, I am just
assuming.
Lately, my
skeptical mind has developed a concern that there is a serious flaw in Tata
Motors’ strategy for their
passenger vehicles. Tata Motors is a typical case where brand got diluted
because product got associated with a niche market rendering it unwanted for
majority of their target customers.
I still remember
my school days when a Tata Indica would stop on a red light and people would
run after it thinking it to be a taxi. The owner of the “private vehicle” would have a hard time explaining the budding passengers that it’s “his” car and would steer
away swearing never to own a Tata car again.
While taxi
owners continued to prefer Tata Indica, Indigo and Sumo for their ruggedness
and longevity, individuals moved away to Maruti and Hyundai. Whatever was left
was taken away by majestic “Nano”. I still believe that Nano should have been
launched by CSR wing of Tata Sons and not by Tata Motors.
Well, with so
many disasters in past, it’s very understandable
that Tata Motors has been trying to resurrect itself by moving away from the
tag of “Taxi”. That is where, I believe, Tata Motors has
got it all wrong.
First, they are
trying to compete in a space which is well captured by Maruti & Hyundai and
Indians don’t seem to be in a mood
of giving up on them yet (I see more Ciaz than Zest and Bolt together on
roads). Anybody looking for a change has many options and Tata Motors is
definitely not among the preferred in those options.
Second, India’s automobile landscape has changed. From
queuing up (one over the other not one after the other) at a red light for a
taxi, people have moved to billion dollar apps. Now, even a limo could be taxi
(or cab, as it’s called now). So,
being branded as cab is no more a taboo. In fact, passenger vehicles as cabs
are at an inflection point with Anand Mahindra also recognizing the potential
threat it poses on the individual consumption of cars.
Tata Motors
could have been the core beneficiary of this transformation if it would have
focused on preserving its image as preferred “Taxi”. On the contrary, I
see many Maruti cars being used as cab. In their zeal of moving away from Taxi
image, Tata Motors has destroyed their “moat” in passenger vehicles.
Let’s load our guns of probability and shoot a
scenario where Tata Motors strategists are loser who accepted their defeat in
the passenger vehicle arena and have decided just to focus on “Taxi” as their target market. With advent of radio cabs, they could have
approached Ola Cabs for an exclusive partnership. The deal would be that
anybody who wants to purchase a new car to be used as a cab can buy it from “Ola preferred” Tata Motors at a 10% discount with a minimum commitment of 3 years
with Ola.
It would have
been a win-win situation for all. For buyer, it doesn’t matter if it’s Maruti or Tata, if he’s using it for commercial purpose. What
matters is price which looks attractive with Tata (discounts, that too
exclusive, make people go insane). For Ola cabs, which are spending billions to
increase its market share, a three year commitment from cab owners would be a “Tathastu” moment. For Tata Motors, their loser strategists would have become
the game changers boasting about their far farsightedness.
Phew!
Imagination can tire you. Time for me to grab a cup of coffee.
Comment if you liked it. Comment if you hated it.. Damn you if you ignore it :)