Five years ago when Timothy Liverton joined Tata Motors as the head of product planning and engineering, the domestic carmaker was struggling to keep its head above water. Indica, the company’s most sold car, had fallen from its prime in 2004. It looked old and weary, as if creaking under its own weight.
Hyundai i10 and i20, Maruti Swift, Toyota Liva, Ford Figo, and Volkswagen Polo had entered the market with superior style and better technology. That relegated the Indica to just the fleet operators’ favourite. Soon, even they shifted loyalty to Maruti’s Dzire, and Toyota’s Etios. Tata Motors’ market share is down to a third of its peak of 16.9% in 2004-05. “The industry has changed a lot,” says Liverton, who has worked with BMW and Jaguar-LandRover (JLR) — the latter is now owned by Tata Motors.
Two years ago, Tata Motors launched a campaign called Horizon Next. It sounded more like a marketing gimmick. Two new products were launched, the Zest and the Bolt. Though the cars had interesting features and did not look like the Indica, they were modified extension of the old platform. They did not do well.
The new “cool” cars
In the 1990s two Indian commercial vehicle makers — Tata Motors and Mahindra and Mahindra (M&M) — wanted to become full-service automobile manufacturers. M&M wanted a larger play in the SUV market, and Tata in passenger cars. M&M did try to make cars in partnership with Renault, but its only product, the Logan bombed. “We will be an SUV player. Even our latest launch is a crossover SUV,” says Pawan Goenka, executive director of M&M.
But Tata Motors still wants to be a full service player. At the Auto Expo that just ended, it showcased its new range of products — Zica, Kite5, Nexon and Hexa. None of them resemble the Indica.
Hexa is an SUV, to be launched next year. Zica, the “zippy” car, which is looking for a new name after the Zika virus outbreak, is an all new car. “We are also coming out with a new sedan (Kite 5),” says Girish Wagh, senior vice-president – programme, planning and management for passenger cars.
Wagh’s challenge is to launch two new products every year. “It was important for the brand to be cool, for the cars to look sleeker, to have infotainment and connectivity gadgets,” says Wagh. Every time Tata Motors launches a car, it will be more youthful. That is important. “If you can’t get people through the door of your dealership you are in trouble,” says design head Pratap Bose.
A little bit of JLR
When Liverton joined, the design team’s office was like a cubby hole. A team of 25 people sat and designed vehicles that looked distinct from the modern ones brought in by the MNCs. Today the team has more than 300 people. Two-thirds of those are in Italy, and rest in the UK. They have started working closely with JLR.
Design and engineering have been brought together. The cars are developed, tested and produced with both the departments working in tandem. That is something JLR taught Tata Motors. Liverton also infused the team with the understanding, again learned at JLR, of how to make teams work together towards a common goal. “The development process was completely overhauled,” Liverton says. If Tata Motors launches two new vehicles every year, it will have 10 new ones by 2020. Some of those, he says, can become global products.
Tata Motors being a listed company, brokerages and bankers are taking note. “For the India business, we believe 2014-15 marked the earnings trough, and we expect gradual recovery from there, with EBITDA margins swinging from -2% in 2014-15 to 9% by 2017-18, driven by sharp volume recovery across segments,” writes Binay Singh of Morgan Stanley. EBITDA margins are a key indicator of financial health.
It’s not just about new vehicles. Liverton will have to see that the cars are also refreshed from time to time. The Indica was flogged for years with cosmetic changes. Others in the stable — Safari, Indigo, Sumo — have also spent much time looking to be in severe need of new trims. Some of the old horses may at some point be riding into the sunset. But is this a new sunrise for Tata Motors?