WHEELS IN MOTION
Fortune India|December 2020
Tata Motors is recovering its mojo, one category at a time. Passenger vehicles are on track, powered by new design sensibilities. Now the auto major is looking to bring the shine back to its crown jewel, JLR.
PRERNA LIDHOO

RANK

6 (5)

2020 COMPANY PROFILE

TATA MOTORS

REVENUE

2,61,875.55 CRORE

PROFIT

-12,070.85 CRORE

NET WORTH

63,078.53 CRORE

EMPLOYEE COST

30,438.60 CRORE

KEY

NO CHANGE

MOVED UP

MOVED DOWN

NEW

NOTE: THE NUMBER IN BRACKETS DENOTES LAST YEAR’S RANK

IN INDIA, the early 1990s were defined by a handful of functional cars with boxy designs that often lacked personality. It was a time when the concept of SUVs hadn’t yet reached the country’s roads.

That was to change by the end of the decade. In 1998, Tata Motors— No. 6 on the Fortune India 500 list this year—introduced the Safari at an aggressive price of ₹8.25 lakh. It was, as Tata Motors CEO and MD Guenter Butschek calls it, “India’s first true SUV”. Not only was it the first time that people got a taste of a four-wheel drive by an Indian automaker, Tata Motors managed to prove its manufacturing prowess beyond trucks and heavy vehicles.

This isn’t the only time that India’s third-largest automaker (by volume) has led market innovation. The Indica was one of the first small cars to get a diesel variant while the Indigo became the first sedan to be introduced in the sub-four metre segment. As a company, it hasn’t shied from taking risks (remember the Nano?). As Butschek puts it: “Tata Motors has a rich legacy of introducing product innovations that have successfully created new categories and market segments. Several relevant examples can be quoted from our 75-year history—the S-series of trucks, 407 in the ILCV domain, Ace in the SCV segment, Nexon, India’s first GNCAP 5-star rated car, etc….”

Along with innovation, Tata Motors’ products are now being tailored to keep up with consumer preferences, and it is working. Even during the pandemic-led lockdown, in the April-October period of 2020, Tata Motors overtook Honda Cars India and reclaimed its third position in the compact segment—with its Altroz, Bolt, Tiago, Tigor, and Zest—by selling 44,941 vehicles; compare this to 32,230 in the same period last year, when it dropped to No. 4.

Things have, in fact, been on track for the auto major over the last four years. But the ride hasn’t always been so smooth.

In the decade between 2006 and 2016, the company was struggling. During that time, its domestic passenger vehicles (PV) business had faced headwinds due to issues of quality, cost, and inadequacy in its product portfolio. Its Indica platform, with its three models—Indigo, Marina, and Indigo CS—hadn’t been able to sustain competitiveness. The Indica and Indigo’s move into the fleet segment didn’t work either, because of a positioning dissonance with personal car buyers.

Enter Butschek, in 2016, who joined Tata Motors with a reputation for rebuilding. He had restructured companies like Airbus and Netherlands Car BV (a joint-venture between Daimler and Mitsubishi Motors Corporation), gearing them for sustainable growth. Along with this experience, the former COO of Airbus also brought in strategic learnings from the aeronautical industry. The concept of an ‘angle of attack’, for instance. The ‘angle of attack’ is the angle between the oncoming air and the aircraft wing that is a crucial factor in facilitating the lift of an aircraft—or, in this case, of Tata Motors, which had reported a loss of ₹2,800 crore in FY17. Butschek began by introducing “six relevant angles of attack”: top-line cost reduction, improvement of core processes, customer centricity, new technologies, business models and partnerships, and a lean and accountable organisation.

This helped start Tata Motors on, what he calls, “its transformation journey”. The intent, he says, was “to counter key business challenges that were accentuated by the developments in the external environment such as structural reforms in the economy [demonetisation, introduction of GST] and introduction of new emission standards [from BS III to BS IV to BS VI]. We planned a ‘turnaround’ to overcome these challenges and to prepare for the future by becoming more agile and nimble.”

The last four years have seen the transformation unfold in two parts. Butschek started with Turnaround 1.0, that involved structural changes in the organisation, and a strategic move away from an outdated portfolio to more viable product offerings. Turnaround 2.0 began in 2018 with a focus on redesigned models, cost reductions, wider integration with its subsidiary Jaguar Land Rover (JLR), and making the business more self-funded and profitable.

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