As India's automobile passenger market grows, it rapidly expands towards Tier-3 and Tier-4 cities. Growing aspirations for technologically savvy feature-laden cars have also stirred the rural markets. You do not need to look at barren variants; even the base models in the affordable segment are packed with treats that were available earlier. We discussed with Amit Kamat, Chief Commercial Officer, Tata Motors Passenger Vehicles, who shed more light on how Tata Motors is seeing a healthy uptick in rural buying and is on a constant spree to expand its dealer network across the country.
How do you perceive the potential market demand for Tata Motors passenger cars in Tier-3 and rural areas? Have you observed any distinct preferences or requirements from these markets that influence your product offerings?
The aspirational gap between rural and urban is on a constant decline. In fact, in the last few years for TML, rural sales have grown more than urban. With sales now constituting a substantial 40% respectively of our overall PV sales, we have extensively worked on detailing our strategies to expand our footprint. Catering to this growing demand, we've expanded our sales infrastructure nationally, boasting over 850 rural outlets (as compared to 517 in FY21) dispersed across towns, complemented by 135 Anubhav vans (as compared to 35 vans in FY21) serving as mobile showrooms. In our close study of these markets, we have analysed our customers in detail, which has helped us to strategise our plans here.
For instance, we have noted that rural customers who were once more inclined towards manual transmission vehicles are now expanding their preference towards AMT as well. More and more customers are opting for higher variants, larger body styles and alternate fuel options in these locations. While the car-to-SUV preference has turned around from pre-COVID times to now, where the share of voice in SUV sales has moved from 35% to more than 70%, there has also been a notable increase in alternate fuel car usage. Alternate fuels (CNG+EVs) contributed to only 5% of our rural sales in FY22, significantly increasing to 23% in the last FY.
The above data is a small example of the diverse customer preferences. Keeping this in mind, we have developed a portfolio that is so wide that it has a choice for everyone.
What challenges do you anticipate in these regions, and how does Tata Motors plan to address them? Are there any community-centric programmes or collaborations to build trust and awareness about Tata Motors' offerings for these markets?
With India booming with opportunities, all brands are looking to join this growth curve. In this dynamic environment, rural areas have emerged as important territories for us to explore. While we already boast a significant presence in these regions, the increasing purchasing power of our customers has made the hinterlands of our country a booming land for auto sales.
Over the last few years, we've witnessed a significant surge in product penetration within these markets. This credit for this successful expansion goes to our product offerings, which, combined with our multi-powertrain strategy (petrol, diesel, CNG, and EVs), gives customers the freedom to choose from what best suits their needs. Furthermore, our strong network presence (over 850 rural outlets supported by 135 Anubhav vans – mobile showrooms), service stations (over 260 workshops) and targeted marketing have aided Tata Motors in carving a niche for itself when it comes to understanding the customer mind-sets.
Our regional teams engage in continuous activations, helping keep the momentum high. These include roadshows, sales melas, service camps, and community-centric workshops aimed at connecting with existing and potential customers in rural areas. Additionally, across markets, we work closely with local influencers like the Sarpanch, VLEs - Network of village-level entrepreneurs and CSCs - Common service centres (these are government-run institutions that sell products on their owned digital platforms) to penetrate at a deeper level and understanding the pulse of the customer. While these activities occur throughout the year, we work on increasing the frequency during new vehicle launches to increase awareness.
Furthermore, our Anubhav vans, which are essentially mobile showrooms, are used for door-to-door marketing. These vans are equipped with audio and video, which efficiently work as an information disbursing mechanism to our current and prospective customers, helping reach pockets where we do not have a brick-and-mortar presence.
Following a 360-degree approach, we tactfully support our customers with great finance schemes, helping them buy their most loved Tata car. Tying up with local village banks has proved to be a great success model as they have deeper networks than nationalised banks, and they come up with more friendly schemes towards the locals. One great example is our tie-up with one of the local finance institutions, where we provide prospective customers with a six-monthly EMI scheme. This aligns with the farmer's crop patterns, as some farmers receive money every six months, depending on their harvest. So, it becomes easier for them to pay EMIs at an interval of their choice.
These are just some examples of community-centric programs that have helped us succeed in the interiors of our homeland.
How does Tata Motors balance earnings and innovative marketing tactics in expanding its dealer network amidst the separation between ICE and EV showrooms? Considering the substantial investment needed for separate showrooms, how does the company ensure sustainability, and does increased innovation risk excessive costs?
In marketing, we have a National and Regional approach. In the National approach, our Marketing efforts are aligned with product strategy depending on the product lifecycle, demand potential, and market size. The intensity is higher for new nameplates as one has to create awareness of a new brand. For existing brands, the intensity is lesser but more focused on target consumers.
Our Regional teams work hand-in-glove with channel partners on the desired demand-generation activities, and this feedback is shared with the marketing teams. We also drive specific regional interventions during strategic occasions like Onam, Baisakhi, Durga Puja, etc.
Distinct teams within our shared dealership network currently manage our EV sales. Across several of these shared dealerships, we boast over 200 shop-in-shop setups tailored specifically for our EV clientele. We are well entrenched in the markets we are selling and are expanding in locations to increase our reach scientifically and address more customers.
For EVs, we have recently introduced two exclusive EV showrooms in Gurugram and are in the process of expanding.
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