How TATA motors' GENIUS STRATEGY is racing it past Hyundai & Suzuki in India? : Business Case study

Summary

Tata Motors has achieved remarkable success after years of struggle, growing its market share and becoming a leader in India's electric vehicle (EV) sector. The company doubled its market share to 12.14% by FY22, driven by strategies like platform sharing and leveraging synergies across Tata group companies. Tata's platform strategy reduced costs and increased efficiency, while their early entry into the EV space provided a first-mover advantage. Collaboration with other Tata companies enhanced their EV ecosystem, making Tata Motors a key player in the automotive industry. The video highlights Tata's turnaround and growth strategies.

Takeaways

• 🚗 Tata Motors reported its highest-ever annual sales, reaching 3.7 lakh units, marking a 67% increase from the previous fiscal year.
• 📈 Tata Motors' market share rose from 4.6% in FY16 to 12.14% in FY22, an extraordinary turnaround after 15 years of struggling in the Indian auto market.
• 💡 The company mastered the 'Platform Strategy' by reducing the number of platforms from six to two, which allowed them to scale efficiently by sharing parts across multiple models.
• 🔧 Platform sharing has significantly cut costs and minimized waste, leading to more profits per car and less risk in case of model failures.
• ⚡ Tata Motors became the leader in the electric vehicle (EV) space in India, with an 80% market share, leveraging a quick-to-market strategy by adapting existing models like the Nexon into EVs.
• 🔋 Tata Motors' entry into the EV market was supported by other Tata Group companies like Tata Power, Tata Chemicals, and Tata Autocom, creating a robust EV ecosystem.
• 🛠️ The platform-sharing strategy has increased operational efficiency, cutting down implementation time by one-third and lowering defect rates, resulting in reduced warranty costs.
• 🚙 Tata Motors achieved higher operating profit per car than market leader Maruti Suzuki for the first time in a decade, with further profitability expected as more cars are built on their new platforms.
• 🌍 External factors like currency fluctuations (post-Brexit) and pandemic effects posed significant challenges for the company, but Tata's efficiency helped them manage these risks.
• 📊 Tata Motors' successful strategies include leveraging economies of scale, minimizing unique parts, and repurposing existing facilities for EV production, which provided them with a first-mover advantage in India's EV market.

Q & A

What was the market share of Tata Motors in FY16, and how has it changed by FY22?

In FY16, Tata Motors had a market share of just 4.6%. By FY22, this had more than doubled to 12.14%.

What key strategy did Tata Motors use to achieve its rise in the Indian auto market?

Tata Motors implemented a platform-sharing strategy, reducing the number of platforms from six to two, which helped them optimize costs, reduce wastage, and increase profit margins by leveraging economies of scale.

How did the platform-sharing strategy help Tata Motors reduce costs?

By using fewer platforms and increasing the number of models per platform, Tata Motors could use common parts across different models, reducing the need for unique parts, lowering costs through bulk orders, and minimizing wastage in case of unsold inventory.

What are the two platforms used by Tata Motors, and what type of vehicles are built on them?

Tata Motors uses the Alpha platform for smaller cars and the Omega platform (derived from Land Rover’s D8 platform) for larger vehicles between 4.3 to 4.8 meters in size.

How did Tata Motors enter the electric vehicle (EV) market, and what was their initial approach?

Tata Motors entered the EV market by repurposing existing gasoline car bodies like the Nexon, fitting them with battery packs by hand instead of setting up an expensive assembly line. This allowed them to launch EVs quickly and cost-effectively.

What advantages did Tata Motors gain by having other Tata Group companies support their EV development?

Tata Motors received extensive support from other Tata Group companies, such as Tata Power for setting up EV charging stations, Tata Alexey for developing connected vehicle platforms, and Tata Chemicals for making lithium-ion cells, enabling an efficient EV ecosystem.

What impact did platform sharing have on Tata Motors' profit per car in 2021?

In 2021, Tata Motors’ operating profit per car rose to ₹45,810, which was nearly double that of the market leader Maruti Suzuki.

Why was the safety rating of Tata Motors' vehicles significant in their market rise?

Tata Motors’ vehicles, such as the Nexon, Ultros, Tiago, and Tigor, received high safety ratings from Global NCAP, with the Nexon and Ultros achieving 5-star ratings. This helped them gain a competitive edge, as safety became an important factor for consumers.

What role did economies of scale play in Tata Motors’ platform-sharing strategy?

Economies of scale allowed Tata Motors to reduce the cost of parts as they increased production volumes. For example, increasing the order quantity of a part from 2,000 to 10,000 units significantly lowered the price per unit.

How did government regulations and Tata Motors’ domestic presence benefit their EV growth?

As an Indian company, Tata Motors received favorable treatment from government policies aimed at supporting domestic EV production. This provided them with a competitive advantage over foreign brands like MG and Hyundai.