[JS Kwt]

Used Car business next big bet of Tata Motors

“Our next big strategy is to take forward the used car business. We will have an upgraded network which will cater to the customers looking to buy pre-owned vehicles,” Mayank Pareek, president of Tata Motors passenger vehicle business told FE. He was speaking on the sidelines of the launch event of its SUV Harrier.

Tata Motors is planning to scale up its used car business this year replicating the strategy of Maruti Suzuki and Mahindra & Mahindra’s pre-owned business, but will not have a separate chain for the segment.

The company is running a pilot programme in several locations and is in the process of identifying markets where pre-owned cars are in huge demand.


Tata Motors had in 2009 commenced its certified pre-owned car programme — Tata Motors Assured —, but has not been able to match up to the competition due to gaps in product portfolio and falling demand. New product launches after 2015 such as Nexon, Tiago and Tigor has helped the company revive its market share.

Currently, Mahindra & Mahindra (M&M) has the largest network of over 1,700 pre-owned cars outlets under the umbrella of Mahindra First Choice. Maruti Suzuki has the second largest network of 1,200 outlets under the brand name True Value. Hyundai Motor India has a network of around 470 outlets.
Tata Motors, which currently has a dealer network of 780 outlets, plans to increase it to 2,000 by 2021.

Source

[Miyata]

"Next big strategy!" What was the previous one? Yea, there was an interesting commercial out there, but they are only beginning to better understand and take "customer satisfaction" seriously. Hope it's not an eye-wash!

[S.MJet]

Originally Posted by Miyata

"Next big strategy!" What was the previous one?

The impact design philosophy upon which their recent success is riding.

[CrAzY dRiVeR]

Before jumping into used car business, their next big strategy should have been a complete revamp of their customer touch points. Products like the Harrier and H7X will bring in a different set of customers, and existing TATA showrooms may not be all apt for this premium customer expectations.

Used car business is a good move to bring in much needed revenue, nonetheless.

Originally Posted by Miyata

"Next big strategy!" What was the previous one?

Seriously? There is no denying that TATA Motors have achieved so many things on the product development front in the past few years - even though they have much more ground to cover.

Originally Posted by S.MJet

The impact design philosophy upon which their recent success is riding.

Impact Design was only a small element of HORIZONEXT. I think TATA Motors stands where it is now - only thanks to this change of direction from Karl Slym in 2013.

It started off with a complete revamp of existing products and platforms - and resulted in products like Bolt, Zest, Hexa and Nexon. Impact Design 1.0 was a midway between the old designs and their new design direction due to this reason, now ending up in 2.0 with their brand new products and architectures like the Harrier and 45X.

[Miyata]

Originally Posted by S.MJet

The impact design philosophy upon which their recent success is riding.

Too early to comment on that. A telling graph that might put that view in some perspective :

Have nothing against Tata, but they been have in the business for far too long and possibly guilty of being too complacent that any step they take might seem rather "impactful and tall on strategy." Will wait and watch. Hope they do well though, cosmetics notwithstanding.

[JS Kwt]

Originally Posted by CrAzY dRiVeR

their next big strategy should have been a complete revamp of their customer touch points.

Products like the Harrier and H7X will bring in a different set of customers, and
existing TATA showrooms may not be all apt for this premium customer expectations.

Excellent post CD
Couldn't have agreed more.

We just purchased a Nexon and the first day to the Service Centre was an unpleasant experience.
Though the product is Strong and Safe, it still has niggles and the Service Centre attitude of the manager was very poor.
If you ask me, i will not buy another Tata car, even if it is a Harrier.
So instead of revamping TATA ASSURE, Tata has to "ASSURE" that they Satisfy the Expectations of the high wave of customers which these good products are bringing to their shores, as that will sustain their growth and bring them more revenues in the Long Run.
Tata has to ASSURE that those one-time customers come to it's showrooms for their next Cars, if they want to compete with Maruti and Hyundai.
If the Customer wave dies down due to word of mouth of their poor service attitude, LESS people will buy their NEW cars, forget about those TATA ASSURED used Cars.

[sids1811]

I think they first need to put in place a better sales and service team. The very experience of inquiring about a Harrier from their showroom makes you feel unwanted, can't even imagine what levels of service will be there. The kind of attitude they have for their own new cars is such, what will they do for used cars.

The announcement sees more as a statement to say that we are also thinking something and let the financial markets give something to bite on. They don't have any other favorable news lined for 2-3 quarters at least and The JLR condition is not helping them a bit and any attention away from it is good. 12 months down the line they can easily say market study was not favorable for Used car business and just shy away from it.

[V.Narayan]

Correct move by Tata. In the years to come the second hand car market, at least in numbers sold, could compete with the new car market. As our large number of two wheeler owners move to cars the first stop will be the used car market. The used car market in India is ~34 to 36 lakh units per year and growing at ~15% per annum according to one report and closer to 20% pa as per another. According to Financial Express the used car market in India this financial year will cross 1 lakh crore [or Rs 1 trillion]. With Indians selling cars after shorter periods of first ownership the cars become more attractive to the second buyer.

Very tough market to be in. Certainly tougher than in the new car market. It is the right direction to think towards. Mahindra's, the other Indian brand, are already in it. Tata should be there too.

[Aviatoraval]

I believe it’s not the correct time for TML to step into used car market. Are they thinking about trading involving only TATA vehicles like Maruti true value or going for Mahindra concept?
Looking at the step motherly handling given to Hexa, I'm not convinced about new sale and TML is asking for people to pay money for used ones.
IMHO the healthier marketing approach will be to first make the superior foundation and then spread the kingdom elsewhere. May be start with the ones mentioned below.
1. Kudos to TML, their hatchback and sedan is going strong.
2. Rekindle the love people had for HEXA, and do it with the same zeal when introduced.
3. Launch Automatic gear box for Harrier.
4. R&D headed for better Hybrid/EVs/BSVI engines, for existing platforms like Hexa/Harrier.
5. Take better control of your dealers and make sure that they deliver finest customer satisfaction.

TML you need to win the hearts, not the market.

[GTO]

The used car market is already bigger than the new car market. Tata is entering the segment late, but it's a step in the right direction. A focused strategy can be a win-win for everyone:

- For used car outlets, the biggest problem is inventory. Tata's dealers can have a ready supply via trade-ins, especially since their new cars are now selling well.

- For Tata's customers, an easy trade-in will bring convenience.

- For dealers, here is an additional channel for revenue and one which can easily beat the margins on new cars. Profitability has been a pain point for many Tata dealerships.

- For Tata, one of the benefits can be that it can take steps to maintain or increase the resale price of its cars. Of course, this can only happen if they reach a dominant position (like True Value which sells more used cars than Tata does new).

[octane_100]

Though as a strategy it sounds fine, putting them all in place (execution) will be the key. IMHO Tata should not open too many fronts to work on at the same time. Sales have picked up but don't think I can say the same about pre and after sales experiences ( going by the account of members documented on this forum). They should take up one challenge at a time!

[peus017]

Not sure what timelines are they looking for to get started on this, but with the current state they are in Assured space(https://www.tatamotorsassured.com/buy/enquiry). I believe they need major transformation to grab attention.

I had very good experience with Toyota U Trust in past, specially their inspection check points and added warranty on cars with certain age builds buyers confidence and they really held up to the name "TRUST"

[tarik.arora]

With this newly formed strategy, they should first focus on offering better prices for their own cars. I know that this is not the intention of a used car business but this will give their own customers better options with in the brand.

The first product from the 'new Tata' was introduced in 2014 (read Zest) and now that customer base will soon be out in the market for an upgrade (assuming the average ownership at 5-7 years). What does Tata have for those customers? How is Tata ensuring that those customers stay within the brand? They have the products to offer (Nexon, Harrier, Hexa) but when a Zest owner gets to hear his vehicle's re-sale value, do you think he will ever return to the brand?

This is coming form an ex-Zest owner who literally cried on hearing offers for his 3 year, 95k kms run car (XMA variant). It took me over 3 months to sell that car, and had to settle for a pretty low price. At the end i exchanged it at a Tata showroom only as i was looking for a Nexon but the price offered was nothing to write about.

Now, before people start questioning me, i tend to keep resale value at the bottom of my priority list while shortlisting a car. Only the product wins for me, brand and resale don't matter much. However, it pinches hard (financially and mentally) to loose big money when you are upgrading. Not many people share this mindset and Tata needs to have something for the majority. I dont expect Tata cars to match Maruti or Hyundai in resale but it still should be respectable. Tata can put some money there and contain customers within the brand.