ManagementServing up a 'Super Ace'
Tata Motors’ decision to promote its mini-truck as an FMCG brand has worked
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The 1.5x2.2 meter area where Ravindra Salunkhe sells vegetables and fruits at the upmarket Cuffe Parade in South Mumbai may look like just another case of an unauthorised hawker occupying prime space.
But the mobile shop is actually a Tata Motors Ace, the company’s sub-1 tonne cargo vehicle.
Salunkhe, who hails from Kolhapur, borrowed Rs 1 lakh from his brother and the balance from ICICI Bank to purchase the Ace four years back. He pays an equated monthly instalment (EMI) of Rs 6,500 without any sweat. The reason: his mobile grocery unit earns him a monthly income much higher than his EMI payout.
No surprise then that about 90 per cent of Ace buyers are actually first time vehicle owners who want to start their own business, using the vehicle — something that has encouraged Tata Motors to go ahead with the launch of its one-tonne ’Super Ace’ truck in December.
The Super Ace will produce double the power of the existing 750 kg Ace, offering higher utility and costing 40 per cent more.
Ravi Pisharody, president (commercial vehicle business unit), Tata Motors, says, “A large chunk of those who wish to start a small business find Ace useful. The upfront payment of just Rs 50,000 adds to the attraction of Ace.”
Even though the vehicle was designed as a last mile solution in construction and building sites and factories, it has evolved as a vehicle that meets even individual consumer needs.
“We have to explain to the unsuspecting target customer who is otherwise a three-wheeler buyer that Ace is a very versatile product, which can provide employment to them too”, Pisharody added.
Buyers are obviously listening. Ace, launched in May 2005, recorded its 100,000th sale in less than 22 months even though it costs Rs 1 lakh more than the three-wheeler cargo vehicles. Ace now sells close to 200,000 units per year.
Tata Motors has laid extra emphasis on positioning the product differently than conventional three-wheelers. The company says the success of Ace proved beyond doubt that the Indian market is not as price conscious as is projected widely, if the consumer is convinced about the product’s quality and durability.
Ace, thus, has a 60 per cent share in the last-mile cargo vehicle segment that sells 18,000 units a month.
Marketing the product and creating a brand identity for Ace wasn’t an easy task as Tata Motors didn’t want to stretch the ad budget beyond a point. Traditionally, commercial vehicles are rarely advertised as they are marketed to large fleet owners. But the company decided to market Ace like an FMCG product without going in for heavy ad spend.
The solution, Pisharody says, was found in unconventional cost-effective methods like partnering with Moser Baer (for advertisement home video) as research showed that film viewership is quite huge among the target consumers. Ace was also promoted in a Marathi and Tamil movie as well.
To make sure that production kept pace with demand, Tata Motors handpicked a few dealers and equipped them to handle the increasing sales volume in the most efficient manner.
The other problem was that the traditional Tata Motors network of CV dealers was geared up to sell only large trucks and busses. The company solved the problem by setting up a single mother dealer in most popular markets with eight to 10 service branches affiliated to it.
The massive dealer channel expansion has led to a touch point base of 1,100 across the country, which is much more than what most three-wheeler manufacturing companies have.
Even as Bajaj Auto, Mahindra & Mahindra and Ashok Leyland plan a fresh foray into the four-wheel cargo segment, Tata Motors has gone in for the kill by launching fresh variants of the Ace.
The company has already launched a fuel efficient Ace (EX), which delivers 6-10 per cent higher mileage than the current Ace. It is priced Rs 10,000 more.
With the launch of the new variants, Tata Motors will increase the production of Ace and its by-products to 250,000 units a year from 180,000 units currently.
Meanwhile, Salunkhe is planning one more Ace up his sleeve, quite literally. He is planning to buy another Ace – this time from his own resources. That must be music to Tata Motors’ ears.