In a bid to make its truck and bus business more agile and future-ready, Tata Motors, India’s largest commercial vehicle maker, has restructured the organisation creating new lines of business to empower each business line with a sharper focus and greater accountability.
The new development comes amidst an intense effort by the company to reduce discounts and also a sharpened focus on Vahan or retail sales over wholesale despatches as it strives to regain double-digit margins compared to increasing market share.
In FY2023, Tata Motors clocked wholesales of 413,539 units, comprising both domestic and export market sales, which was a 16% YoY increase (FY2022: 35,6972 units). India market sales at 3,93,317 units were up 22% year on year.
Three-pronged business growth strategy
As per the newly calibrated operation, the CV business has been effectively grouped into three fully equipped end-to-end business units – Trucks, Buses and Small Commercial Vehicle business from the earlier four business units.
As part of this new structure, Tata Motors has created a new business line – ‘Trucks’ by merging existing heavy truck vehicle divisions and light, intermediate, medium commercial vehicle divisions into one consolidated division. This dedicated unit, led by Rajesh Kaul, will offer full ownership for sales, service and key account management will enable the team to meet the customer’s needs, said people aware of the latest development at Tata Motors.
Similarly, the small commercial vehicle (SCV) business is being strengthened by formation of a dedicated nationwide sales and service network. Given the large volumes of this CV sub-segment, Shubhranshu Singh, the CMO, has been given the additional responsibility of sales and marketing in the SCV business. He will work closely with Vinay Pathak, who will lead the SCV business.
Meanwhile, a new digital business line, led by Bharat Bhushan, has been set up to promote all digital offerings starting with Fleetedge. The international business responsibility stays with Anurag Mehrotra, whereas the spares and the non-vehicle business is being led by R Ramakrishnan, and the strategy function headed by Prasad Phadke. All these business heads, along with the function heads of R&D, Operation, Marketing, Finance and HR, will report into Girish Wagh, executive director, Tata Motors.
All the alignments have been done to accelerate the company’s CV business’s profitable growth with a focus on customers, added people in the know.
A Tata Motors spokesperson confirmed the development and told Autocar Professional, “We have simplified the organisation structure, created new lines of business and further empowered each of the business lines. With these actions, the CV business is becoming more agile, customer-centric and future ready to tap the growth opportunities ahead with greater focus.”
Achieving cost efficiencies
Given the relentless input price pressures, structurally weak cost economics, higher overheads and manufacturing expense, profitability had become a clear sore area for Tata Motors. To address this and many other structural challenges, the company had brought on board McKinsey & Company in 2022 to conduct a deep scrutiny of the areas that needed fixing.
Over the past 18 months following McKinsey’s intervention, Tata Motors has been able to shave off over Rs 3,000 crore in costs through reduced discounts and cutting of structural costs. Addressing employees and dealers on multiple occasions in the recent past, Girish Wagh had voiced the effort needed to restore market share and profitability.
Sources said that these decisions have flowed from the chairman N Chandrasekaran, who has been taking a weekly update on the business.
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