Mayank Pareek, President, passenger vehicle business unit, Tata Motors (TML), has the tough task of turning the fortune wheel of the company in its favour. In a conversation with Nevin John of Business Today, Pareek talks about how he plans to build sound products, offer contemporary sales experience and make inroads into rural markets. Excerpts from the interview:
Q. TML is looking to be aggressive in its new avatar under the leadership of Cyrus Mistry with back-to-back car launches, capital infusion and going for new technologies. What is happening?
A. I have been here for just a few months. For a long time we didn't launch a new car. One of the big things that TML started doing was to develop, design and launch new products. We target to launch two products every year. Last year, TML launched Zest and Bolt. They are culmination of our new design philosophy of HorizoNext. These products are developed utilising global skills. It has inputs from our design centres in the UK, Pune and Italy. The cars are developed with cutting-edge technology and some its features are not even there in luxury cars. This is part of an attempt to redefine TML for the future.
Also, a lot of work has been done to improve customer experience, which is important during sales and after sales services. In addition, we spend on digital platforms for interacting with the consumers. Through infrastructure creation, we try to improve the customer experience. Apart from these, we give trainings to improve the skills of the workforce. For a long time, TML was selling cars to the fleet customers. The way the fleet customer buys is different from the car customer. Fleet customer looks for deal while the other looks at product and services. So we are improving the skill of the employees to benefit in their networking with customers, especially in selling cars to individuals, young families and professionals.
The other area in which we put effort is in aligning our manufacturing system and quality practices with the global standards. We have drawn a lot of learning from JLR for changing it here in India. In this way, we have worked on all including product, customer, quality and manufacturing. We learnt processes from JLR, but not shared any technology. It has been an interesting journey. The results are quite good. In the last few months, we have done better than the market. In January, while the industry grew 5.8 per cent, TML grew 18 per cent. We are confident that it will continue.
Another important thing is the dealer network. India is spread over 650 districts and 5,500 tehsils. But our footprint is there only in 460 places. The task we have taken is to increase the dealer network by three times. We will increase the network to 1,500 in the next four years and this year, we will be adding 200 outlets. In these days, customer doesn't like to travel long distances for purchase or service. We need to be near our customer. Also, we are coming out with a concept of mobile services. We are piloting it in Delhi and Mumbai. It will be scaled up to entire India once its ready. The concept is completely different from what others are doing now. Effective and cost-effective service is important factor for creating loyal customers.
Q. Considering your long stint in Maruti Suzuki, what are first findings here and the corrections that you think?
A. After joining here I met lot of people: dealers, suppliers, customers and employees. One thing stark realisation was the goodwill of the brand 'Tata'-good people, good company and the success. There is a positive empathy for the company. It was a good starting point, but it was difficult for people to like a company which has not done well for the last 4-5 years.
At the same time, I realised that there are lot of areas where improvement is possible. Customer experience is one such area. There are works to be done in products and footprint, which is low. We are hardly there in suburban and rural markets. The demand is there but we are not there. Also, there are product gaps. In addition, we have taken rapid steps to improve the product quality.
Q. Despite being the oldest player in the Indian automobile industry, TML failed come up with a Scorpio or a Swift or a Duster or an Innova. Why did you miss the blockbuster car?
A. We will catch up on this. But the fact is that Indica was an iconic car. Before Dzire and Amaze, Indigo was the first car in that segment. True, Nano has not worked. But it is an iconic concept. Nano is the recent development, so it is there in everyone's mind. We forget the past. Our attempt is to go back to the glories.
Q. When Karl Slym was the chief executive of the company, his immediate priority was to change the brand perception. How far has it progressed?
What is brand? In isolation it's nothing. It is a promise. Why does someone go for a smart phone that costs Rs 60,000 instead of a phone that costs Rs 10,000? It is because of the promise of quality, discontinuity and something superlative. Brand is an experience. You buy, sell and service cars and that is experience. Brand is created around product. First attempt is to create such products. Then brand will be created. For instance, Bolt is a product which is comes under 'affordable luxury' category.
Q. After many years you came up with a product like Zest, but there were supply issues right from the beginning. The waiting period was six months. How does it happen when a company ambitiously looks for a change with a landmark product?
A. It is natural, actually. Automakers usually decide on a product 48 months before its launch. Today we are in 2015, but we know which car will come in 2019. Also, we are estimating about the future demand today. Now you will understand the situation. In the case of Zest, we were launching a car after many years and it was for the first time we launched a sedan with petrol engine. It was a huge testimony to TML's engineering. There were many unknown things during the launch of Zest. Under those circumstances we came up with Zest.
Secondly, getting each variant right is difficult. There would usually be 50 variants of a car nowadays. It is not only TML but most of the car makers go wrong at least in the case of some variants while doing forecasts. But the strength of the company is how quickly you can come back. How quickly you can readjust the production plans, programmes and supply chains. Forecasting the economy, industry and the market place is the toughest job that we do while working as automobile manufacturers. The chances of variations will be there in such a situation.
Q. What is your plan for rural market?
A. Rural market is a big opportunity. At least 30-40 per cent sales should come from rural market. The rural prosperity is untapped. In the last 5-6 years, minimum support price has gone up and lot of infrastructure has been created. The demand has a huge upside. For expanding to rural markets, we need to create infrastructure. It has to be built brick-by-brick. Indian market is the sixth largest now, but projected to become the third. Today it is about 2.65 million, which is expected to go up to 5 million.
Naturally all the global players want to come to India. The market is big enough for accommodating all the players. There are so many niches at which customers are looking for. Variants are coming every day. Within utility vehicle category SUV has come first; then MUV and compact SUV. Already, off-roaders and soft-roaders have come. This will keep on spreading. As people buy different type of phones, it will continue in automobile segment also.
Q. While Maruti enjoys high brand loyalty, all other automakers find it tough to crack into the big league. What is your strategy to increase your market share?
A. From any automobile manufacturer, a customer requires four things -sound product, good build quality, contemporary sales experience and reliable service support. Any player can capture the market share in the country if they deliver on these four pillars of customer requirements as market share is but a result of the value proposition of an OEM's products.
At Tata Motors, under our HorizoNext strategy, we are working vigorously across all the relevant four pillars. We plan to make global quality products available to its global customers in the country through these three elements - DesigNext, DriveNext and ConnectNext. Based on these pillars, we have developed the Zest, Bolt and the GenX Nano. We have gone through the process of focusing on quality and getting it right in the very first attempt.
Our processes have changed, materials have changed as the engineering itself has changed. We have built strong quality processes based on global best practices to ensure enhanced manufacturing quality. We have made conscious efforts to resolve all customer issues at the earliest. As per the newest policy, all customer related concerns need to be resolved at the dealership level within 24 hours of the complaint being filed. If any issue remains unresolved, we as a management will directly look into the matter. Starting October 2014, we have noticed that the resolution rate has risen from 13 per cent to 65 per cent as of January 2015.