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How Tata Ace Opened A New Market Segment

Published On Dec 31, 2015By Lisa Pradhan

Tata Ace, popularly known as the ‘Chotta Hathi’ in the Indian small commercial vehicle (SCV) market, celebrated its 10th anniversary this year. After its inception, this small wonder not only brought a revolution in the commercial vehicle sector in India, but was also responsible for being the harbinger of a new segment in the automobile industry in India—the SCV industry.

As Tata Ace celebrated its 10th anniversary this year, we analyze how this trendsetting mini-truck led to the growth of the CV industry, and the company Tata Motors.

How the four-wheeler SCV idea germinated

Faced by frequent and extreme recession cycles at the turn of the century, key players in the trucking segment were knocking their heads to cope up with the situation. At that time, one of the largest brands in India, Tata Motors, commanded a large market share close to 60 percent and boasted of a huge manufacturing capacity. To prevent future downturns and to wade through the lean market, the company began to analyze the needs of the consumer.

Tata surveyed the four primary segments existing in the trucking sector at that time, namely, intermediate commercial vehicles, light commercial vehicles, medium commercial vehicles and above, and the sub-four-tonne market. The concept of four-wheeler small commercial vehicles was non-existent during that time. The sub-four-tonne market was dominated by three-wheeler manufacturers such as Bajaj Auto, Piaggio, and Mahindra & Mahindra.

However, during a market research in Coimbatore, a customer revealed how he was yearning for a four-wheeled mini truck with the stability and comfort promised by a heavy commercial vehicle, but priced within a budget of Rs 5 lakhs. Similar feedback pointed towards a rising demand for small trucks.

How Tata Ace was launched

During this time, the hub and spoke model was also gaining popularity and another study revealed that the medium commercial vehicle segment will no longer dominate the market in the future. Tata was also trying to identify the growth opportunities in the domestic market, especially at the bottom of pyramid level. After several research and development, the company perfected the engine of its new innovation. The engine cost a third of its competitors, offered optimum performance, was as fuel-efficient as a three-wheeler, complied with BS II and BS III emission norms, and became the USP of Tata Ace. The vehicle was finally launched in 2005 and it took the market by storm.

How Tata Ace swept the market

Seeing Tata Ace’s extraordinary growth, other brands of commercial vehicles also rolled out similar vehicles, thus leading to the birth of the small commercial vehicle (SCV) segment. Sales kept on rising with every passing year (including 2008-09 when the commercial vehicle industry was facing a downturn) and thus, forced competitors to follow Tata’s footsteps. An effective vehicle for last mile connectivity, Tata Ace sold one million units in November 2012.

Even today, the company claims that every fourth truck sold is a Tata Ace. The recession-proof vehicle has boosted Tata trucks to new heights and has made Tata Motors less vulnerable to market fluctuations. Today, Tata Ace accounts for 40 percent of Tata Motors sales in terms of volume. This mini-truck has been the fastest to sell more than a million units, successfully reaching this sales mark in exactly 2680 days. The goods carrier also has a strong presence in 28 countries worldwide.

How Tata Ace transformed lives

More than half of Tata Ace’s owners are first-time entrepreneurs. The socio-economic profile of the customers indicate that most of the buyers are males, belong to the lower income group and are aged between 20 to 40 years. Also, around 50 percent of the consumers of Tata Ace are based in towns with populations under 100,000. At one of Tata’s meetings, customers spoke about how Tata Ace has helped them increase earnings and provide quality education for their children.

By introducing a product to exactly match a gap in demand, Tata Motors has strengthened its foothold in the industry. The subsequent new vehicles launched in the segment have proven to be life-changers, demonstrating sturdiness, dependability, and reliability on the roads.

See Also:

Decoding the Immense Potential of the Small Commercial Vehicle Industry

TrucksDekho.com Looks to Transform Commercial Vehicle Buying

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