[Reinhard]

Originally Posted by arulpeem

Hope they have come up with a monocoque construction rather than a body on ladder construction. That will ensure far better weight reduction and rigidity leading to better dynamic performance, acceleration and fuel consumption. Looking at the way the XUV500 is doing well in the rally circuits, the monocoque bodies seem to hold very well in tough conditions too.

Its the XUV500Extreme doing rounds in really. Certainly it has a far more reinforcements and redesign in the chassis. So I'm not sure if it directly proves the capabilities of the road going xuv. It's like saying the Citroën ds3 is the most robust car as Sebastian loeb always wins wrc...

[aditya79india]

There were earlier reports of the Q501/502 being based on the Freelander 2 platform. That should make it monocoque in construction.

Tata's attention to motorsport has been rather lackadaisical. they should field a proper and cohesive motorsports team and use it to improve road going vehicles the way Mahindra is doing. The Q501/502 could be a good starting point, and so could be the Bolt with a superior state of engine tuning.

[aditya79india]

Some websites are reporting the projects to be C501/502. Is it C501/502 or Q501/502

[prashanthyr]

I have said this before and at the cost of repeating myself, will put it out here again. IMHO, Tata needs to stop focusing on what is at best a market niche (SUVs) and concentrate on getting their mass market products right - Hatchbacks, Sedans, Crossovers and MPVs.

Unfortunately for Tata, JLR can at best provide technical input on products - they have very little experience at the mass end of the market, especially on what it takes to produce a desirable car at the right price, in the right variants and volumes, position and market it correctly - something Maruti / Hyundai etc have mastered, especially in an Indian context.

If you recall, even global giants like VW / Toyota have failed in this aspect - Etios / Polo / Vento are prime examples of products which couldn't fulfil the ambitions of the manufacturer.

[shortbread]

Originally Posted by prashanthyr

I have said this before and at the cost of repeating myself, will put it out here again. IMHO, Tata needs to stop focusing on what is at best a market niche (SUVs) and concentrate on getting their mass market products right - Hatchbacks, Sedans, Crossovers and MPVs.

Unfortunately for Tata, JLR can at best provide technical input on products - they have very little experience at the mass end of the market, especially on what it takes to produce a desirable car at the right price, in the right variants and volumes, position and market it correctly - something Maruti / Hyundai etc have mastered, especially in an Indian context.

If you recall, even global giants like VW / Toyota have failed in this aspect - Etios / Polo / Vento are prime examples of products which couldn't fulfil the ambitions of the manufacturer.

The problem is the small car market is not really lucrative:

1) The Indian small car market follows the sheep mentality, they buy what others buy and apart from Hyundai no one else has really cracked maruti's chokehold in India. Definitely not due to lack of trying either. For all the development, marketing, value car makers can provide, majority of the buyers prefer the safety of buying what their neighbours, relatives, parents etc. have bought.

2) Margins: Small cars have poor margins and if the car does'nt sell much then 9 times out of 10 the makers take a hit. Its a big gamble with very little in prize money. Despite all the cars & bikes Suzuki sells all over the globe Tata Motors make 3 times their profit!! The biggest lesson Tata has learnt from taking over JLR is that what they need to make is cars people want to buy rather than ones people have to buy.

I doubt for all the effort Tata has put into the Zest and Bolt as well as the brilliant value it provides, they will struggle to sell volumes like maruti.

So rather than fight them where they dominate, move the goalpost where maruti has struggled, i.e above the 10 lac bracket especially SUVs.

For each SUV Tata can sell they will end up with at least 3 times the profit they would have made from a small car. You are correct, JLR doesn't know the mass market. Its because they don't need to. Why enter a crowded fight over a bone when you can join the few who are enjoying steak on the other side?!

[akhilesh51]

Originally Posted by shortbread

For each SUV Tata can sell they will end up with at least 3 times the profit they would have made from a small car. You are correct, JLR doesn't know the mass market. Its because they don't need to. Why enter a crowded fight over a bone when you can join the few who are enjoying steak on the other side?!

JLR may not need to know volume market because it is a niche product and can survive in its own league. We can no, however, use same analogy for success of Tata.

We shall not forget that there is a reason Maruti hasn't been a success over 10L bracket. It simply doesn't provide the aspirational value for 10L+ vehicle. Tata is the epitome of low cost vehicles and will struggle even more in the same bracket (For e.g. Aria). Further, such a strategy could lead to dilution of JLR brand value too which could break JLR in long run.

Tata should simply stay away from JLR at this point. Let them make the big monies and rake in the profit while Tata simply reaffirms it status as India' most value for money brand along with improvements in Quality and Reliability benchmarks. Make steady growth by providing better vehicles with each iterations in the segments it currently operates and slowly get back in the game.

[shortbread]

Originally Posted by akhilesh51

We shall not forget that there is a reason Maruti hasn't been a success over 10L bracket. It simply doesn't provide the aspirational value for 10L+ vehicle. Tata is the epitome of low cost vehicles and will struggle even more in the same bracket (For e.g. Aria).

I would disagree, if the product is right people will aspire to own it. The Safari is one of Tata's strongest brands despite the lifetime they took in improving the product. Despite its many niggles and lacklustre sales the brand still has respect in the market. The XUV500 was a product that hit the nail right on the head. A well packaged VFM SUV that people wanted to own.

Had the Aria adopted an SUV instead of a crossover profile and was sensibly priced Tata would have created a product with good demand. The market for a good SUV in the 10-15 lac market is not really crowded and there's plenty of room for more products.

The low cost car segment is simply saturated and apart from a few models the rest aren't making any real money. Tata have resolved their quality and value issues with the Zest and Bolt, they will also sell well in all probability. But even then its highly unlikely Tata will make any real money on them.

The small car market is very similar to the 100cc motorcycle segment. Just like Hero churns out Splendors and Passions which people will buy irrespective of what the rivals have to offer.

[prashanthyr]

Originally Posted by shortbread

The problem is the small car market is not really lucrative:


For each SUV Tata can sell they will end up with at least 3 times the profit they would have made from a small car. You are correct, JLR doesn't know the mass market. Its because they don't need to. Why enter a crowded fight over a bone when you can join the few who are enjoying steak on the other side?!

This brought a smile to my face ! Agree, you'll make 3 times more money per car, but then the market is just 10% of the mass market at best. So you are consciously restricting yourself to a market niche.

Also, its not like JLR is going to keep making 10-11% margin for ever. In fact, all reports indicate that their margin is going to get diluted as they themselves go into the entry level premium market.

Given this situation, wouldn't it be better to diversify the risk and address a key market as opposed to a niche? Or maybe Tata can create a new market - after all, they were the ones who single handedly created the 4m sedan market!

[CrAzY dRiVeR]

Originally Posted by prashanthyr

Tata needs to stop focusing on what is at best a market niche (SUVs)

Market Niche? Perhaps you should have a look at these two graphs.





Let's face it - those two products that sell more than all their equivalent priced competition, combined, are not extra-ordinary. Mahindra XUV5OO still is far from niggle free and the Toyota is almost bordering on daylight robbery in terms of pricing their 'premium' Fortuner.

There is a huge opportunity for a well engineered product here. If TATA plans to go up the ladder, it has to be an SUV. Storme is a capable product, but needs a lot of work in terms of packaging to make it a segment best-seller.

Originally Posted by prashanthyr

And concentrate on getting their mass market products right - Hatchbacks, Sedans, Crossovers and MPVs.

Originally Posted by prashanthyr

Given this situation, wouldn't it be better to diversify the risk and address a key market as opposed to a niche? Or maybe Tata can create a new market - after all, they were the ones who single handedly created the 4m sedan market!

So you feel they are ignoring the mass market segment?

Zest just got launched. (Sub 4m sedan)
Bolt is coming soon. (Premium hatch)
Kite is undergoing road testing. (Compact hatch)
Kite sedan has also been spotted wearing production clothes.(Compact Sub 4m sedan, if there is such a thing! )
Also in the pipeline is the hatchback with codename Pelican, to take on the Alto, and is supposed to have a diesel engine.
And the hatch based Nexon cross over.

All this based on some solid technologies like the new 1.2 Revotron petrol, AMT mated to the 1.3 diesel, a new 800cc diesel etc.

They have been guilty of ignoring every segment in the past. But currently - If the above is not considered a proper product offensive from TATA Motors, I dont know what is!

[Autolock123]

Originally Posted by prashanthyr

Unfortunately for Tata, JLR can at best provide technical input on products - they have very little experience at the mass end of the market, especially on what it takes to produce a desirable car at the right price, in the right variants and volumes, position and market it correctly - something Maruti / Hyundai etc have mastered, especially in an Indian context.

Couldn't agree more on this. JLR can be more of the input provider but there is very little scope for direct sharing of the technology considering they both are too different.

In my opinion, technology is something which has not remained unique to any particular auto manufacturer in the mass market segment. you could get access to technology from global players. what clearly differentiates one product from another today is - Design language of product and how it caters to the needs of particular market.

Tata's two cars per year strategy hopefully should bring some great products with new design language which is far far away from INDICA.

[shortbread]

Originally Posted by prashanthyr

This brought a smile to my face ! Agree, you'll make 3 times more money per car, but then the market is just 10% of the mass market at best. So you are consciously restricting yourself to a market niche.

Hi Prashanth, real nice to have this discussion.

Firstly, Tata is not limiting itself and have a proper small car launch strategy as 'Crazy Driver's mentioned.

But I would rather have Tata focus on niche segments where there isn't as much crowded competition. Even if the small car segment is huge Tata ends up selling about 10k cars at best, why not focus and sell 7k SUVs instead. Even if Tata makes an exceptionally brilliant small car it will struggle to sell a quarter of what maruti does!!

I am not really sure India will remove itself from the maruti syndrome when it comes to small cars. But the market will mature and people will move to more premium products, sooner or later. Suzuki has been trying to go upmarket for 2 decades, India and abroad, but they never can create the right product. Tata can do this, make an exceptional SUV, price it right and still make margins and sell well. Unlike the small car segment who really are there rivals. At best its Mahindra, but there's plenty of room for 2 makers.

Originally Posted by prashanthyr

Also, its not like JLR is going to keep making 10-11% margin for ever. In fact, all reports indicate that their margin is going to get diluted as they themselves go into the entry level premium market.

JLR's margins are north of 20%, very very healthy!!

This is despite the fact that they are making 9 models on 7 platforms!!

Coventry is resolving this and eventually diluting it down to 4 platforms for what will be a 11+ model line up. They are moving to the executive car market but are poised to make big savings as well. Also along with the XE and Discovery Sport, JLR have the Jag SUV, Evoque cabrio and two new extra premium models in the pipeline. JLR are very carefully balancing their product margins.

Originally Posted by prashanthyr

Given this situation, wouldn't it be better to diversify the risk and address a key market as opposed to a niche? Or maybe Tata can create a new market - after all, they were the ones who single handedly created the 4m sedan market!

I guess both our arguments have their valid reasons. What I am not convinced by is the argument that if tata launch the perfect product they will give competition to maruti. The hegemony maruti has over the Indian small car market is too deeply entrenched to be affected by competition factors alone!!

[Autolock123]

Originally Posted by shortbread

Hi Prashanth, real nice to have this discussion.



But I would rather have Tata focus on niche segments where there isn't as much crowded competition. Even if the small car segment is huge Tata ends up selling about 10k cars at best, why not focus and sell 7k SUVs instead. Even if Tata makes an exceptionally brilliant small car it will struggle to sell a quarter of what maruti does!!

Achieving 7K sales for a single product in SUV category is really tough. Except Bolero i don't think any SUV has been able to achieve it ( please correct if wrong). But in Hatchback -mass market segment, market is huge with right product and price i think a single product could aim to 10K sales.

Having two products per segment is going to add lot of costs- if not much in production but for sure in marketing and positioning of two products per category but still then I think hitting 7K mark is a bit stretch target.

[kothamasi]

Tata should focus on a compact SUV in the league of the Suzuki Jimny and price it reasonably at around 4-5 lakhs. I feel the Mahindra Thar fails because it is priced upwards of 6 lakhs. If priced between 4-5 lakhs and with options of hard-top (like the Jimny), it would turn out to be a best-seller. But right now it is aimed at a very niche market.

[kaviprem]

^^ Why dont we see a Compact SUV at less than 4L. Anyway, its just TATA ?
4-5 Lakhs SUV - I dont know what and how we qualify a SUV ?

The term SUV has been highly misused these days.
Put a spare wheel on tail gate, then its a SUV ?
EcoSport - is it a SUV ?
Quanto - is it a SUV ?
Aventura - is it a SUV ?

[aditya79india]

^ Ahem, a rustic 4WD barebones vehicle with seats on a short wheelbase chassis is what was probably meant.