Tata Indica V2 Xeta: Competing in the Indian Small Car Market

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Case Details:

Case Code : MKTG177
Case Length : 28 Pages
Period : 2006 - 2007
Pub Date : 2007
Teaching Note : Available
Organization : Tata Motors Limited
Industry : Automobile
Countries : India

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"The Tata Indica story resembles the fable of the ugly duckling in some ways, with one crucial difference: the country's first indigenously designed and manufactured passenger car never looked less than pretty. But, like the duckling of the fairy tale, it has emerged stronger and more beautiful than ever after overcoming global competition and a recessionary market."¹

- K. A. Ananthram and Mohini Bhatnagar, independent columnists, in October 2000.

"All of us knew we would have to go through the learning curve. Our effort has always been to shorten that curve and get ahead of the competition. We never lost sight of our goal, which was to provide the customer with a product (Indica) that offers the best value for money."²

- Rajiv Dube, Senior Vice-President (Manufacturing & Commercial - Passenger Cars Business Unit), Tata Motors Limited, in October 2000.

"Tata Motors has always been known as a diesel carmaker, despite the fact that they know petrol too. Tata now wants to shake off that image and plant the Indica firmly in the minds of petrol punters too. And this is precisely the reason for the new Xeta variant."³

- Siddhraj Singh, an auto-analyst with Autocar India, in 2006.

Introduction

In January 2007, it was reported that Tata Motors Limited (Tata Motors) beat close rival Hyundai Motor India Limited (HMIL)⁴ to capture the second position in the fast-growing passenger car market in India, behind market leader Maruti Udyog Limited (MUL). In December 2006, Tata Motors' car sales stood at 12,665 units against HMIL's 11,049 units.⁵

The growth for Tata Motors came in the compact car segment, primarily driven by the strong performance of the Tata Indica (Indica) range. In January 2007, the Indica reported its highest ever monthly sales since launch, at 14,466 units, a growth of 14% over January 2006.

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Industry analysts said that this growth was mainly due to the launch of the Indica V2 Xeta (Xeta) in January 2006, and subsequently its revamped version in November 2006.

The Xeta was developed by Tata Motors as a pre-emptive move to fight competition, mainly from MUL and HMIL in the passenger car segment. The Xeta's "eXtra Efficiency Torque Advantage" according to the company, was proffered as an answer to the market demand for fuel-efficiency at a competitive price.

Xeta was a refurbished version of the company's Indica V2 Petrol car. Analysts said that through Xeta, Tata Motors intended to create a unique brand identity in the mind of the customer for the petrol variant of Indica. The company intended to make a major impact in the petrol driven compact car segment with the Xeta.

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1] K. A. Ananthram and Mohini Bhatnagar, "Putting the customer in the driver's seat," www.tata.com, October 2000.

2] K. A. Ananthram and Mohini Bhatnagar, "Putting the customer in the driver's seat," www.tata.com, October 2000.

3] Siddhraj Singh, "Xeta, the warrior princess," www.hindu.com, March 04, 2006.

4] Hyundai Motor India Limited (HMIL) is a wholly owned subsidiary of Hyundai Motor Company, South Korea.

5] The Indian Express, "Tata overtakes Hyundai," www.tata.com, January 19, 2007.


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