March 2006 | Sujata Agrawal
East of Aden
Tata Motors' commercial vehicles are on a roll in the oil-rich countries of West Asia, where a carefully charted strategy over the last five years has resulted in a rapidly increasing market share
West Asia, formerly known as the 'Middle East', was one of the first few regions where Tata vehicles were seen outside India. It was in the 1960s that Telco (now Tata Motors) first exported its medium commercial vehicle (MCV) trucks to Kuwait. Business built up slowly. Murari Trivedi, who has been heading West Asian operations since 2003, clarifies: "Export was done mainly by participating in international tenders or by following up on business enquiries. In those years the company's focus was on the domestic market; there was a very high demand for our vehicles." Telco did not have enough sales personnel in the region. It would follow up on leads given by Tata International, which had offices in the region, contacted customers and sourced orders.
The business built up in this clutch-brake fashion over the next three decades. Even so, Tata vehicles were soon rolling down the roads of UAE, Bahrain, Kuwait, Saudi Arabia, Qatar, Turkey, Yemen and Oman.
The scenario changed significantly in early 2000. Ravi Kant, managing director of Tata Motors (then executive director) made international operations a major focus area in the company's business plan. The erstwhile export division was transformed into the international business division. A four-filter process decided which countries had business potential, and a strategy was developed for each target country.
Understanding the competition, pricing and product segments is vital, and people have been placed in the chosen countries to develop business. Tata Motors has a young and enterprising bunch in the West Asia team, comprising Jayant Athawade, FS Khan, Sandeep Bathija, Sudhansu Shekhar, Ayub Sayed and Kailash Vispute, who are revving up operations and exploiting the full potential of the region.
With high oil prices boosting revenues, West Asian governments are spending huge sums on infrastructure like roads, bridges, ports, airports, refineries, warehouses and hotels. Tata Motors has the right products for the construction sector, at very competitive prices. Potential business for both commercial and passenger vehicles is very high.
The automotive industry in the region is highly competitive. All major global players have a presence in the region. Tata Motors has been able to carve a niche by addressing specific segments, such as transportation of school children and workers. Today, Tata Motors' vehicles have a strong brand value. They are perceived to be reliable and suitable at the given price. The company is now the market leader in MCV buses in the target segments, with a share of over 60 per cent in the region versus 38 per cent just three years ago.
But this didn't happen by itself. Over the last four years, the company has completely changed its attitude in terms of customer focus — from just selling its products to being tuned in to customer requirements. Tata Motors works with its distributors to understand the end user's needs, bring in appropriate products, undertake value additions wherever required and thereby satisfy customer requirements.
Tata Motors markets its vehicles through one or two distributors in each country in the region, depending on the size of the market. The distributors interact with the customers, who include institutional buyers and fleet operators. United Diesel, the company's Dubai distributor, has been selling Tata buses in the UAE for more than 30 years. Its customers are construction companies and schools.
United Diesel general manager Mike Makary was in India recently, to visit the company's bus building plant in Goa and discuss the company's growing business. The construction boom and many new schools opening each year have led to an increase in customers as well as repeat orders. "Tata vehicles are in demand, as they are suitable for the required applications, at very competitive prices," says Mr Makary.
The Tata Motors 80-seater bus is the number-one selling bus in the UAE today. It was a different scenario just two years back when Ashok Leyland, Tata's only competitor in the large bus segment in the UAE, had a better market share. Tata Motors made a concentrated effort to change the scenario, setting up a regional office in UAE to give better support and help sell more vehicles in the market. "The quality of the vehicles has improved. It shows in the reduced number of complaints our customers bring to us," says Mr Makary. Tata Motors wants to build a long term relationship with its distributors, so that business growth is healthy and increasingly profitable.
Distributors are invited to visit the plants at Jamshedpur, Lucknow and Pune, where they interact with engineers, get a first hand feel of the technology and production processes, as well as make suggestions. When United Diesel is faced with a technical issue, the distributor sends a technical representative to interact with plant personnel.
They come with photographs and video recordings of the problems, and discuss them threadbare till a solution is found and the required modifications are made. Mr Makary is very happy with the quick response he gets from the company on technical issues. Tata Motors wants to build a long-term relationship with its distributors, so that business growth is healthy and increasingly profitable.
After sales support is a critical component for success in the automotive business. Distributors have their own facilities for servicing Tata vehicles, and Tata Motors trains the distributor's and even the customer's service teams. Service managers visit customers along with the distributors to understand the customer's complaints and ensure that they are resolved.
West Asia continues to be a very traditional region. Business, even today, is done on the basis of relationship. "Customers like to meet a representative from the manufacturer. It creates a good impact; the customer feels confident, comfortable and secure. It helps convince them to buy from us, specially when it is a large deal," says Mr Makary. "Here, marketing is through personal discussion," concurs Mr Murari, "your physical presence is very important, and you have to be close to the customer."
The company has chalked out a two-pronged strategy, to retain existing customers and to get new ones. There is also a specific strategy for each product segment — medium and heavy commercial vehicles, light commercial vehicles (LCVs) and pickups. The company aims to be among the top three in each of these segments.
The company and product strategies are driven through structured systems and processes. Anil Sekhar, senior manager, channel and process management, was earlier based in Jamshedpur and involved in setting up plant systems and processes. Now, he's bringing his expertise to the area of international sales and marketing. Market review and customer feedback is done regularly. An application matrix helps track sales and vehicle usage.
A 'sales talk' manual ensures that all salesmen talk the same language about Tata Motors products in the region. Mr Sekhar is also working on standardising branding and signage in the Middle East. "With higher volume sales, we are now ensuring that our distributors and dealers display the corporate identity on all signages. This helps in visibility and an increased awareness about the Tata brand," says Mr Sekhar.
The company has increased its product range from large buses to small buses, air-conditioned buses, LCV trucks, MCV and HCV trucks, and pickups, which have proved very popular in the region. Passenger vehicles have also made their debut in the region, in Turkey in December 2004. So far 1,500 vehicles have been sold and more markets are being explored.
The company is gearing up to introduce new buses and trucks. The Tata Novus range, with a higher horsepower and load carrying capacity, is under consideration. Tata Motors has ambitious plans for the region, to enter new markets like Iran, Iraq, and Egypt. These are big markets, where large volumes can be generated. Egypt is in close focus. After a comprehensive market analysis, Tata Motors is re-entering the country, and is conducting a feasibility study for setting up an assembly plant in the country.
So, even as West Asia looks to invest its new riches, in the region itself, Tata Motors, is now all set to translate its recent successes into a more dominant presence in the region.