The automobile sector plays a crucial role in boosting the Indian economy and includes two-wheelers, commercial vehicles, three-wheelers, four-wheelers such as cars, trucks, buses, etc. The automobile segment of India uniquely meets the demand of the population having low and middle-income groups that make this sector unique among the other countries that are producing automobiles. There is a great demand for Indian vehicles in the domestic as well as international markets.
In 2019, India occupied fourth space in the largest auto market displacing Germany; and the automobile sector in India is further moving towards becoming the third-largest auto market by 2021 and displacing Japan. Various automobile companies in India have contributed to such growth aspects of the auto sector. One such leading global automobile manufacturing organization in India is Tata Motors. Tata Motors is a flagship company of US $113 billion Tata Group. It is holding a market leader position among top manufacturers of passenger vehicles and commercial vehicles in India.
The diverse portfolio of Tata Motors consists of sports utility vehicles, buses, trucks, an extensive range of cars, and defense vehicles. The company is also included in the largest OEMs (Original Equipment Manufacturer) of India that offers an extensive range of smart, integrated, and e-mobility solutions. It has a presence in 175 countries and the R & D centers of Tata Motors are in Italy, India, UK, and South Korea.
The headquarter of TATA Motors is in Mumbai and its manufacturing facilities are located in Pune, Jamshedpur (Jharkhand), Lucknow (U.P.), Sanand (Gujarat), Dharwad (Karnataka), and Pantnagar (Uttarakhand).
A Brief Background of Tata Motors
Tata Motors comes under the world’s leading automobile manufacturer and is a part of Tata Group which was initiated by Jamsetji Tata in the year 1868. TATA Motors Ltd. was started in 1945 and initially, it was named Tata Engineering and Locomotive Co. Ltd. which was indulged in the manufacturing of locomotives and other engineering products. The name of the company was changed in 2003 from Tata Engineering to Tata Motors.
Initial Journey and YoY (Year on Year) Growth
Business Model of Tata Motors
The above aspects of the business model canvas of Tata Motors are discussed below in detail:
Tata Motors is indulged in two main key activities i.e. automotive segment operations and other operational activities.
This segment includes activities related to design and development, manufacturing, research & development, sales & marketing, finance of vehicles and their parts. All these activities are explained below:
-Design & Development
The design and development of automotive vehicles i.e. both passenger cars and commercial vehicles (trucks, buses, etc.) are one of the key focus areas of Tata Motors. Tata Motors is very much committed to the design and development of new vehicles, especially, new passenger cars. To ensure the efficiency in the design part of vehicles, the company has three design centers at the national and international level i.e. one design center in India in Pune, one in Turin (Italy), and one center TMETC (Tata Motor European Technical Center) in Coventry (UK). These design centers have specialization in the latest designing practices like digital modeling, architecture, clay modeling, packaging, styling, etc.
For example, they have designed and developed their cars Nexon and Tigor by focusing on global and cutting-edge design. Their ultra trucks are designed by considering global styling, superior performance, and extended comfort in driving. At the time of designing part of commercial vehicles, designers of Tata Motors pay much attention to maintenance, safety, cost of a life cycle, the comfort level of the user.
The emphasis of Tata Motors is on world-class manufacturing. The company ensures that the highest standards of quality must be followed in different stages of the manufacturing process i.e. from design to production to further assembling. The manufacturing plants of Tata Motors follow both the latest and advanced technology and modern manufacturing practices. The company carries the biggest engine development facility in India and only Tata Motors has a full climate testing facility and pedestrian testing facility all over the country.
The plants of the company consist of state-of-the-art manufacturing facilities and assembly lines to handle vehicles in large numbers and of different variants.
-Research & Development
The state-of-the-art R&D facilities of Tata Motors are situated in India, Italy, and the UK. The main focus of these R&D facilities is to oversee the look and feel of vehicles and at the same time, these focus on efficiency, safety, and fuel economy.
Using 3D visualization and integrating intelligent electronic vehicular control systems and hybrid technologies, Tata Motors’ world-class research and engineering facilities have the capability to design complex vehicles.
Tata Motors believes that quality brings efficiency and so, the company focuses on quality control across all its processes. The quality management system of the company utilizes tools for the purpose of continuous improvement, reducing waste and variation in the supply chain, and prevention of defects.
A “process approach” is adopted by Tata Motors to give priority to customer satisfaction and outputs. Also, standardized systems are deployed at different facilities so that superior experiences can be delivered. The manufacturing facilities of the company have been certified for different ISO standards for the automotive industry, environmental management systems. Also, certification of occupational health and safety (OHSAS 18001) has been obtained. Dealers are also encouraged to follow the environmental, safety, and quality management systems of Tata Motors.
-Sales & Marketing
There are a large sales and service network of Tata Motors in India. For distribution and sales, generally, the dealership method is adopted by the company. Tata Motors has different distributors across India and also, service centers. These service centers have a sufficient number of spare parts and accessories. The distribution network of Tata Motors is extensive and they display their major launches in their showrooms as well for providing an experience of the product. The company is also into sales of pre-owned cars.
For sales and distribution, vehicles are purchased by the dealers from the company at a negotiated rate. Also, Tata Motors have contracts with India Government and it provides buses and passenger vehicles.
Tata Motors has effective marketing strategies such as strict price control, making a balance between the purchasing power of customers and the profits expected by the company. Different other marketing strategies are adopted by the company till now i.e. marketing investment, product or service innovation, customer experience, etc. All these strategies have supported the Tata Motors brand in its growth.
Apart from the above, advertisements as a marketing strategy have also played a crucial role in boosting the sales of the company. Effective advertisement leads to brand image creation. Tata Motors has also employed a couple of other marketing strategies as well such as after-sales service, effective quality control, novelty, etc.
-After Sales Service for Customers
Tata Motors is committed to offering quality-oriented after-sales service to its customers for better customer satisfaction. For example, the company has a program i.e. Mobile Service Vans (MSV) which is termed as Tata Care Mobile Service Van for assisting and repairing cars. This service is offered by the company in various cities in India. This facility is specially designed for customers to give periodical services such as routine services and minor repairs. Using Tata Care, customers are able to get on the go services through multiple service vans. Also, it is a flexible service for customers who can’t travel to their nearest service station of Tata Motors. Customers can avail all periodical services at their doorstep and for this, Tata Motors has deployed a team of mechanics who are specially trained in this.
In addition to the above, Tata Motors facilitates its customers by providing after-sales service related to vehicle maintenance and repair needs. For this, the company has a network of workshops across India that is authorized by them. Also, if the car of customers meets with an accident, Tata Motors have authorized Body and Paint Workshops to repair these accidental cars and these workshops provide best-in-class repair facility for Tata vehicle of customers.
Other Operational Activities
-IT (Information technology) Services
Tata Motors uses different IT (information technology) platforms to integrate its whole value chain. It enabled the integration of all the processes results in transparent communication, faster decision-making, and information sharing.
As a part of IT services, Tata Motors has its app “Tata Motors Service Connect” for the customers of the segment of passenger vehicles that facilitates customers to engage with Tata Motors for any aftermarket requirements. This app contains a lot of features that help customers in monitoring their aftermarket needs related to the Tata Motor vehicle (or vehicles) they own.
Also, Tata Motors has its subsidiary i.e. Tata Technologies which is a global leader in product development IT services and outsourcing of engineering services. This subsidiary includes innovators and specialists having specialization in the design engineering space and they use cutting-edge technologies for providing a competitive advantage to customers.
Tata Motors has partnered with different NBFCs and private and public sector banks to provide its commercial vehicle customers with a wide range of financial offerings. This tie-up is beneficial for both new and pre-owned vehicle customers.
Private sector banks include ICICI Bank, AU Small Finance Bank, HDFC bank, etc., and public sector banks are Punjab National Bank and Union Bank. Similarly, Tata Motors has partnered with different NBFCs such as HDB Financial Services, Sundaram Finance, etc. Through these partnerships, Tata Motors is able to provide financial offerings to customers such as purchase assistance, aggregate financing, fuel financing, and service cost financing.
Rural, Semi-Urban, and Urban Market
The market segmentation of Tata Motors is based on broadly three categories i.e. Geography, Income, and Uses.
- Geography segmentation includes customers living in urban or suburban areas.
- Income segmentation consists of customers having a low, medium, or high income. This includes both salaried and business class customers.
- Uses segmentation includes the use of Tata Motors vehicles i.e. commercial or private purposes.
Mainly, the target customers of the company are from either rural or semi-urban areas. It majorly caters to the need of low-income families and individuals want to buy the first car. Another customer segment of Tata Motors includes wealthy individuals and families searching for luxurious cars such as the range of Jaguar, Land Rover, etc. So, high class, affluent class, and upper-middle-class customers fall under this category. For example, Tata Indigo and Tata Indica are mainly for commercial purposes, and for the high-class segment, Jaguar is there. Similarly, Tata NANO is for the middle class, the mini truck is there mainly for the purpose of agriculture transport, etc.
Tata Motors also serves the vehicle needs of Defence and is considered the largest private-sector mobility player in India’s Defence space as it provides a wide range of products that operate across the whole military spectrum. The mobility solutions portfolio for Defence includes all types of vehicles i.e. from light vehicle to heavy vehicle. This portfolio is available for the Policy mobility segment, Paramilitary, and the whole Defence.
Tata Motors also has a specific range of specialized Defence vehicles that the company exports to ASEAN, SAARC, African nations.
Truck Drivers and Transporters
The majority of transporters and truck drivers use the vehicles of Tata Motors as the company is a leading commercial vehicle manufacturer in India.
Tata Motors manufactures all types of vehicles i.e. from tractor-trailers to the least costly cars in the world. Tata Motors has a huge range of product portfolios to fulfill the needs of different customers. The company’s diversified portfolio consists of a range of different cars, buses, trucks, sports utility vehicles, and defence vehicles. Also, Tata Motors is the largest OEM provider in India and offers a great range of smart, integrated, and e-mobility solutions.
This product diversity helps the company in gaining a competitive advantage over its competitors as more needs of customers can be fulfilled.
Tata Motors is not only the leading brand of the prestigious TATA Group but also, it is the trusted and oldest brand in the automobile industry. Moreover, in India, it has a strong and extensive distribution market penetration.
Innovation and Technology
Tata Motors focuses on product innovation and new product development for customers as it uses best-in-class technologies, R&D (Research & Development).
The company provides impact designing in its utility vehicles and new passenger cars. Also, through leading electric solutions it has given comfort level to users through the power performance of Tata vehicles and lowest life-cycle costs.
Tata Motors has a great hold in innovation as the company does intensive R&D for this.
Different key resources of Tata Motors include the following:
To operate any business, funds and monetary resources are required. Funds are raised by Tata Motors using a debt and equity mix. Different capital providers include banks, bond issuers, shareholders, and the financial markets. Optimum utilization of these funds leads to drive growth and value creation.
Insights and Innovation
The basis of the product development efforts of Tata Motors includes R&D, engineering, and design. The foundation of the company’s growth lies in continuous innovation, operational excellence, automotive manufacturing process improvement, and benchmark performance. Tata Motors has a great understanding of the preferences of customers and expertise of advanced technology that facilitate them to develop enhanced products along with features to satisfy customers.
This resource includes the equipment and production facilities of Tata Motors for designing, manufacturing their vehicles.
The human capital or manpower of Tata Motors is considered at the core of all its operations. The company has a group of people that includes scientists, engineers, workers, and technicians. They have a staff strength of more than 80,000 employees. The collective skills and experience of these employees are the key to the company’s business.
The manufacturing operations of Tata Motors have a dependency on different natural resource-based raw materials.
Infrastructure Facilities and Infrastructure
There are mainly three pillars on which the manufacturing of commercial and private vehicles of Tata Motors takes place i.e. using world-class R&D and design centers and top-class manufacturing technology. The company focuses on excellence in manufacturing to ensure their facilities to be carried out at every step in the manufacturing process i.e. from design to production to assembly. Maintaining the highest standards of quality is also ensured during such a process.
The infrastructure of Tata Motors has state-of-the-art technology and manufacturing facilities. Their plants are certified for world-class quality and manufacturing standards.
Customer Support Division
Tata Motors’ commercial vehicles include a customer support division that has India’s widest service network across all manufacturers of the commercial vehicle.
The customer care team of the customer support division is indulged into below four integrated functions or activities:
Tata Motor manages customer engagement by their vast network of more than 1600 authorized service points. Also, by providing vital inputs to the development of the product, the customer support division acts as a link between customers and the manufacturing plants of Tata Motors.
Genuine Parts of Tata Motors
The customer support division of the company manages supply chain activities for the spare parts and whole business. These spare parts are promoted under the highly reliable brand of Tata Genuine parts.
The portfolio of services and products is created by the customer care team like reconditioned aggregates, extended warranty, annual maintenance contract (Suraksha), etc. to help customers.
This customer care team looks after the customers of Tata Motors in export markets like South America, Europe, Russia, Australia, Africa, the Middle East, etc.
Customer Service Initiatives
There are a series of customer service initiatives that Tata Motors has initiated to ensure regular assistance to their customers.
Few such initiatives are as under:
- Tata Motors celebrates National Customer Care Day every year in October month.
- To strengthen the practice of customer service, Tata Motors initiated “Grahak Samvaad” in which commercial vehicle owners and fleet owners are able to meet customer care teams and get information related to the innovative offerings of Tata Motors. Customers are encouraged to share their feedback for enhancing the overall customer experience.
- One another initiative to improve customer experience is the revamping of the Roadside Assistance Programme i.e. “Tata Alert”. Through this programme, the company assures customers resolution of the problem within 24 hours for all models of Tata Motors commercial vehicle that are under warranty period and this service is available anywhere in the country.
- For accidental repairs with 15 days assurance repair time, an initiative by name of “Tata Kavach” is there.
- A programme “Priority First” is meant specifically for the premium vehicle segment (Prime and Ultra). In this programme, a special priority desk is there for the total monitoring of vehicles that are reported at the workshop.
- *To provide onsite services to Tata vehicles to save time, different mobile workshops and container workshops of Tata Motors across India are there. There is a Mobile Service Van as well to provide quick services to customers at their doorstep.
Call Center Service
Tata Motors has a separate call center that offers the below services:
After Service Feedback
In this, a feedback survey is conducted and feedback is collected from commercial vehicle customers after 7 days of the service of their vehicle.
For commercial vehicle customers, the customer service center of the company also provides a roadside assistance programme i.e. Tata Alert. This is specifically meant for particular models i.e. M&HCV Cargo.
Center for Customer Assistance
The customer assistance center is there to handle assistance calls of customers for breakdown issues and attend inquiries from customers of a commercial vehicle. This center also ensures that proper co-ordination with the customer or dealers is there.
This call center service includes handling all queries and issues of customers related to AMC problems.
Accident Repairs and Incident Management
This process is there to provide total support for accidental vehicles that come into the workshop for accident repairs. The Insurance team of Tata Motors files the complaint in CRM (customer relationship management) for cases of surveyor appointment. Complaints are marked to the respective dealership. This includes complaint follow-up and close looping. There is a satisfaction check also after 7 days of complaint closure to obtain feedback from customers on the work handled by the dealership.
Value Added Service
Value-added services are provided by Tata Motors for creating and maintaining healthy relationships with customers or drivers. The main objective of this is to consider the safety of the driver and vehicle. These services include giving reminder calls to drivers for the purpose of renewal of their license before 30-45 days of the expiry date of their license.
This includes providing support to channel partners of Tata Motors through a dedicated helpline i.e. toll-free number. This single point of contact is there to help them in looking for support on sorting out their issues.
Subsidiaries and Associate Companies
Tata Motors has subsidiaries and associate companies that are the strong global network of the company. These include TMF Holdings Limited, Jaguar Land Rover, Tata Motors European Technical Centre PLC (TMETC), TML Distribution Company Limited (TDCL), Tata Technologies Limited, Tata Marcopolo Motors Limited (TMML), Tata Marcopolo Motors Limited (TMML), Tata Daewoo, etc. The company has around 103 subsidiaries i.e. both direct and indirect. Also, Tata Motors has 10 associate companies, 2 joint operations, and 3 JVs (joint ventures) in India and abroad.
Partnerships through Strategic Alliances
Tata Motors has a partnership with Chery Automobile Co. Ltd., BMW Group, Cummins Inc., Waymo, Fiat, Marcopolo companies through strategic alliance.
Tata Motors has a network of distributors in different countries and vehicles are exported in these countries to distributors for sale. The network of distributors includes local dealers for the selling and servicing of vehicles in the respective areas.
The products (vehicles) are first shipped by the company to their depot, and from there it is delivered to a local distributor who takes care of the supplies of products to the retailers in that specific region. Retailers sell the products to final customers. In few cases, Tata Motors appoints C&F (carrying & forwarding agent) where there are no own depots are operated by the company.
Manufacturers of Automotive Parts and Components
Tata Motors is in JV (joint venture) of bus-manufacturing with Marcopolo S.A. (Tata Marcopolo) and JV of manufacturing of construction-equipment with Hitachi (Tata Hitachi Construction Machinery), and a JV with Fiat Chrysler to manufacture automotive components and Tata branded vehicles.
Tata Group has a partnership with leading banks of India like ICICI Bank, HDFC Bank, AU Small Finance Bank, Equitas Small Finance Bank, Punjab National Bank, etc., and NBFCs such as HDB Financial Services, Sundaram Finance, etc. to offer a lot of beneficial financial offerings to its commercial vehicle customers. The aim of such tie-up is to increase value offerings for customers i.e. on pre-owned and new vehicles.
Different channels or mediums of Tata Motors to offer its products and services to customers include the following:
Tata Motors has an online sales platform i.e. “Click to drive” that offers a complete sales experience digitally and enables customers to purchase passenger vehicles with just a button click. This online platform has the following features:
Explore and Configure
Customers can buy a Tata car by first registering on the click to drive website. They can choose the product of their choice from the available portfolio of passenger vehicles of Tata Motors and also, they can get assistance by viewing the video brochure to discover each car and its features. So, customers can choose a model of the car of their choice. In addition, there are lots of personalization options available too on the website.
After selecting the vehicle of their choice, customers can then choose their preferred dealer as per the convenience of their location.
To book the desired vehicle, the online payment facility of the token amount is also available on the website. Tata Motors sends order confirmation of the order by email. The customers also get guidance for the remaining process by a call center staff of Tata Motors. Different finance options are provided to buyers and also, exchange services are available for their old car that includes price quotes as well. So, the whole sales process is done virtually through online communication tools including e-mails, video calls, and WhatsApp.
Tata Motors has a vast network of dealers for selling their vehicles. The company has more than 800 dealers located in various cities of India including Mumbai, Delhi, Kolkata, Chennai, Banglore, Pune, and many more.
Repair and Maintenance
Tata Motors has a network of authorized workshops on a PAN India basis for all repair and maintenance needs of customer’s vehicles. These Tata authorized workshops provide best-in-class service for customer’s Tata vehicles. They have a state-of-the-art automated service center, a diagnostic system to ensure the best performance of vehicles by an accurate diagnosis. Moreover, these workshops have well trained and qualified staff such as technicians, service advisors, trainers, team leaders, customer care staff, and expert diagnosticians.
Body and Paint Workshop
Tata Motors also has a network of Authorized Body and Paint Workshops across all over India to take care of accidental cases of Tata cars. These workshops facilitate customers by providing the best repair services of their Tata vehicle and making it roadworthy. These workshops have the latest tools and equipment and the highest quality of repairs is ensured while repairing.
The cost structure of Tata Motors includes below capital expenses:
Tata Motors raises funds required to establish and operate their business by debt and equity mix. This includes capital expenditure.
– Capital Expenditure
This includes expenditure on the usage of raw materials and components. Also, it contains the cost involved in production facilities and the purchase of equipment for manufacturing and designing vehicles.
Intellectual Capital Expenditure
Expenditure on intellectual capital such as R&D, design and engineering, and innovation comes under these categories that are the basis of product development of the company.
The cost involved in hiring employees as per their skill, expertise, and experience, and employee wages and benefits are human capital expenditure.
Expenditure of CSR (Corporate social responsibility)
This includes expenses that occurred in investment in energy conservation.
For the fiscal year of 2020, the total revenue of Tata Motors stood at around the US $34.7 billion which is around 2.6 trillion in Indian rupees.
The main components of revenue generation of Tata Motors are as follow:
Sale of Products and Services
Tata Motors’ revenue mainly comes from the sale of products and the sale of services.
Sale of Products
The sale of products generally includes the below elements:
- Commercial and passenger vehicles and parts of the vehicle
- Sale of other products such as specific software products and other products related to automotive.
The revenues are recognized by the company on the sale of products, sales incentives, net of discounts, and customer bonuses and rebates are given when actual delivery of products is done to dealers.
Sale of Services
This includes revenue generated through maintenance service and extended warranties in case of passenger and commercial vehicles, insurance broking services, and software support services.
This includes interest income earned from financing transactions income by leasing vehicles to customers.
Government Grants and Incentives
These are the other income source of Tata Motors and include export and other incentives i.e. both recurring and non-recurring from the government.