In conversation with Mayank Pareek: President, Passenger Vehicles, Tata Motors

We have a slew of launches at Tata Motors and we should be okay
Mayank Pareek – “Today the prime job of every car maker is to correct BS4, get ready for BS 6, and ramp up BS6 in time. Q4 will be iffy. Retail we are still in growth [phase], year on year. Last month was bad [but] the bookings was high, so December should be okay. This is an odd industry, everything happens in last 7 days. This month even the first 3 days are good, better than what it should be.”

I am preparing for April onwards
MP –“This month [December] is critical, I must do a good retail. [If] Network is empty then I think our new paradigm works. Dealer profitability starts to work. Today Tata Motors margin is 6 percent which is highest in industry. Volumes should fire. “It so happens interest rate was taking away 3 per cent. How will a dealer earn? My target is to bring it to 1 per cent or less. Then volumes should fire”
No model line will be phased out
MP –“Whatever we had to phase out we already phased out. Today every product we have has been launched after 2016. Hexa will not be [available] on 1st April. But little later. We took a call little later [but] it will come. If we could have done [BS6 engineering] for other cars we could have done for this also. Very late we decided a different marketing strategy for it. We think there’s a big slot available for it. If we could do [BS6] for 8 cars we can do for 9 cars.

Not that we have not thought [automatics]
MP –“Definitely automatic is critical. It accounts for 16%. I know competition is there. I know AMT won’t work. As a business head I would like. We don’t have it. It was a conscious choice. Premium we can’t do AMT, it stops much lower. You need a DCT or CVT. “We will get it [DCT], sooner than you expect. Why do you have to rediscover the wheel? We will get it. We should stand for good design.

Locations are important not the [number of] dealers
MP –“You have hub and spoke. One dealer can have 20 outlets, depending on management bandwidth or resource availability. There are MSMEs and skills levels are very different. Most people can manage at best 2-3 outlets. You need to hire professionals empower them, trust them. This is a very different ball game. Most of them are mom-and-pop shops and have come up the hard way. Ideal is hub and spoke. Should not have too many dealer principals. But you need physical or digital presence. You have to service the car, how do you provide that assurance to people. You cannot fragment dealers, selling 10 vehicles, 15 vehicles. No! [Volume of] 100 has to be there. If I make one visit my cost is not covered. It is about holding common inventory and selling through lot of places.”

I am not sure about one dealer per place
MP –“I think competition must be there. Complacency sets in very easily. Some manufacturers started with one dearer one state, they had to change it immediately. We are continuously tweaking. We closed many dealers. "I am mostly in the plant and spending time with dealers because they need hand holding. They need that friendly arm around them that this time will also pass.”

I follow a strategy of inching up
MP –“Tiago we priced at an 8 per cent discount to competing car. Today we are at a premium to that car. So you inch up, you establish, test it, experience the car. “Price is a band. Keeping discovering resistance point, wait for some time, keeping discovering resistance point, inch up. That calibration is tough. Here gut feeling only comes. You get resistance at Kolkata, first place you get price resistance. Wait for some time. Inch up.”

You have not heard [about JTP] because we haven’t spoken about it
MP –“Honestly great idea but we launched last year, September-ish, launched almost at the tsunami. Do you cover your bases or try something new? Naturally that much bandwidth is not there with the dealers. So we are taking a pause.”