SWOT analysis of tata motors in business environment

SWOT analysis of Tata motors .

1. Automobile Industry Tata motors SWOT analysis

2. SWOT ANALYSIS :

3. Tata Motors Group (Tata Motors) is a USD 42 billion organisation . It is a leading global automobile manufacturing company. Its diverse portfolio includes an extensive range of cars, sports utility vehicles, trucks, buses and defence vehicles. Tata Motors is one of India's largest OEMs offering an extensive range of integrated, smart and e-mobility solutions.

4. STRENGTHS 1. India’s second-largest carmaker Tata has 14% of India’s automotive market share while Mahindra & Mahindra has a market share of 7.40%. 2. Broad market reach Tata Motors has a presence in over 125 countries, with a worldwide network made up of over 8,800 touch points. 3. Agility and flexibility Tata Motors’ commercial vehicle (CV) segment’s growth is ahead of its competitors with a 9% market share in the commercial vehicle (CV) segment. 4. Brand recognition Since 2021 Tata has consolidated sales while establishing itself as the best-performing EV car manufacturer in India, powered by sales from its flagship Nexon EV. 5. Innovative and dynamic business approach Turnaround in its domestic passenger segment since 2018 driven by focusing on four vehicles – Nexon, Harrier, Altroz and Tiago, which in 2021 contributed up to 60 percent of the vehicle manufacturer’s sales.

5. 6. Production of future-ready vehicles Tata launched an all-new range of BS6-compliant vehicles across its CV segment in FY21. BS-6 is an emission standard set by India’s government to curb pollution. Tata is also pioneering the production of electric and hybrid buses and has already delivered 645 e-buses to date. The automotive maker also launched CNG-powered vehicles for its green segment in January 2022. 7. Revamped production line The company has changed its practice of developing specific platforms for every vehicle model. It now has two platforms that have seen it streamline manufacturing while reducing development and manufacturing costs. 8. Diversified products and services Tata motors group has 5 primary product segments: Jaguar Land Rover (JLR) – represents 67.4% of the total revenue. Commercial Vehicles (CV) – represents 18.8% of the revenue. Passenger Vehicles (PV) – represents 11.3% of the revenue Vehicle Financing and Others – represents 2.5% of the revenue.

6. 9. Digital marketing and growth in car sales Tata launched its ‘Click to Drive‘ digital sales platform in 2020 enabling customers to select and purchase vehicles remotely and at their convenience. The move drove growth in the company’s passenger vehicles sales which rose 69% FY21 compared to FY20, an eight-year high.

7. 10. Strong focus on quality and safety Tata has shifted its focus towards first-rate quality in product development and manufacturing systems bringing on board global suppliers to improve the car maker’s quality standards. In 2018, Tata Nexon was the first made-in-India, sold-in-India car to get a five-star crash test rating from Global NCAP. Altroz , its other model also achieved a five-star rating in 2020. 11. Good market capitalization Tata Motors’ share price has more than tripled in the past year, with a market capitalization of $16.7 Billion by Oct 2022. This is an indicator of continued confidence among investors. The automaker also saw its rating outlook upgraded from “negative” to “stable” by Moody’s. 12. Strong performance by Jaguar Land Rover (JLR) acquisition Since its acquisition of JLR in 2008, Tata Motors has transformed Jaguar Land Rover (JLR) from a £400 million loss-making venture into a £2.6 billion profit business by 2015. In FY 2021 JLR’s sales in China jumped by 127% compared to the previous year, an indicator of customer confidence in the Asian giant’s market.

8. WEAKNESS 1. Guenter Karl Butschek’s resignation More than 1 year since the Tata Motors CEO stepped down, the giant automaker hasn’t found a suitable replacement for the highly successful former corporate head. Girish Wagh is currently serving as executive director on the company board. 2. Jaguar Land Rover challenges Jaguar Land Rover segment has been challenged for some time. In FY22, the company reported a decline in 14% in retail sales. In 2021, Tata Motors reported a Q4 loss of more than $1 billion for its FY2020/21 while also writing off $2.1 billion related to its overhaul of the UK-based luxury brand business. In May of the same year, it also froze production at its two main factories in Britain due to a lack of semiconductor chips.

9. OPPORTUNITIES 1. CNG powered vehicles Tata Motors has invested heavily in CNG-powered vehicles, a move which is beginning to reap rewards. Demand for CNG-powered CVs rose sharply earlier in 2022 due to increases in diesel prices, making CNG a more attractive option compared to diesel. Overall, CNG so far has accounted for almost 16% of all CV sales for FY22 compared to 3.4% in FY21 within the Tata Motors portfolio. 2. Hydrogen fuel cell technology The vehicle manufacturer has also invested in Hydrogen fuel cell technology which is still in its infancy. Government incentives are expected to reduce running costs for these vehicles, making them more attractive as a mass transport option. There is optimism that demand for this technology will surge towards the second half of this decade. 3. Electric vehicles The rate of electric vehicle adoption in India has surpassed most predictions, especially for electric two- and three-wheelers. Tata Motors has registered a staggering 353% percent volume growth in the electric vehicle segment, and there is still room for further growth.

10. There is also a great opportunity for Indian OEMs to tap global markets with respect to the software-intensive EV technology. Tata Motors expects 25% of passenger vehicle sales to be generated by EVs in the next 5 years. 4. Domestic market growth A report by Goldman Sachs’ BRIC Team, predicts a significant rise in the middle-class population in India. Its middleclass population of 350 million is larger than the entire US population and matches that of the EU. Combined with an improvement in per-capita GDP and purchasing power parity, Goldman Sachs expects India to hit the “sweet spot of car ownership”. 5. Improved business environment Demand for Medium & Heavy Commercial Vehicle (M&HCVs) has improved during the post-lockdown phase owing to India’s economic recovery as well as the Government’s increased focus on the construction and mining industry. Specifically, the Gati Shakti scheme which includes mega infrastructure projects is expected to favor construction and allied sectors, thereby spurring growth in the M&HCV segment. Expansion of the national highway network by 25,000 km envisaged in FY23 is expected to drive demand for cement and steel, also boosting the heavy commercial segment. 6. Expand its luxury segment Opportunity exists within the luxury vehicles segment as proven by strong double-digit luxury vehicle sales in India recorded in first half of 2022. Industry estimates indicate around 17,000 luxury vehicles were sold in the country between January-June 2022 – an increase of 55% over the 11,000 units sold in the previous financial year.

11. 7. Emerging markets India is promising to be an important emerging market for vehicles. Tata Motors has already taken the cue and recently opened 70 new sales outlets in the region. Internationally, Tata has also expanded its footprint in Africa, where the automotive market is valued at USD 30.44 billion in 2021 – and enjoys a significant presence in South Africa, Angola, Kenya, Morocco, Nigeria, and Ghana to name a few. Below is a revenue breakdown of Tata Motors in different regions:

12. THREATS 1. Strong market competition Tata Motors admits it is experiencing stiff competition from domestic and foreign automobile manufacturers who have been attracted by India’s burgeoning automotive market. International competitors are especially potent and bring with them advanced technology, significant financial resources, and international experience. 2. Cybersecurity threats In June 2021, The Business Standard reported that cybersecurity researchers in India had discovered a malicious free gift campaign disguised as an offer from Tata Motors. The malware was used to collect users’ data and is believed to have been carried out by China-based hackers. In 2020, KPMG indicated that 76% of automotive companies had reported having experienced a cybersecurity issue in the previous 24 months, meaning cybercrime is an existential threat in the automotive industry as a whole. 3. Supply chain issues The negative impact of semiconductor shortage – this has constrained Jaguar Land Rover retail sales leading to a 4% in FY22. Lithium-ion battery availability which is critical to Tata’s EV production is also posing supply chain risks to the automaker.

13. In addition, Supply chain disruptions occasioned by China’s lockdowns and dealership closures have affected Tata car sales leading to negative EBIT and free cash flows in 2022 fiscal year. 4. Slowdown in demand for its products Decreases in per capita income and disposable income levels globally due to the pandemic and post-recession can negatively impact Tata’s overall car sales.