Tata Motors launched the Tata Ace in 2005 as a replacement for auto-rickshaws. It has a payload capacity of 0.75 tons and costs 50% less than other 4-wheel commercial vehicles. There was a market gap for a small commercial vehicle to connect urban and rural markets at a competitive price. Through market research, Tata Motors found customers wanted a higher status 4-wheel vehicle at a low cost. Tata developed the Ace with a innovative low-cost engine and parts sharing to create a 4-wheel vehicle at the price of a 3-wheel vehicle. Tata's roadmap is to establish new plants, introduce new Ace variants for different uses, and expand into transport services to increase sales and

1. TATA MOTORS : THE TATA ACE

2. Tata Ace – Basics
• Four-wheeler vehicle launched by Tata motors in
May,2005, as a replacement for auto-rickshaws.
• Price – Rs.2,25,000/-
• Payload capacity - 0.75 tons.
• Costs 50% less compared to other 4 wheeler
commercial vehicles.

3. Creating Value – Gap Analysis

4. 1. Idea Generation
Current Market Situation
• Demand for larger vehicles due to construction of better highways.
• Demand for a vehicle to service the ‘last mile’.
Gap Analysis
• Large trucks will not be allowed in cities during day time and are unsuitable for
catering rural markets because of high transportation cost and road conditions.
• Three wheelers are not allowed on highways. They do not enhance the social
value of the user.
• Supreme court rule on overloading norms.
Idea Generation
• To target the market gap and launch a small commercial vehicle to connect urban
to rural markets at competitive price of a three wheeler.

5. 2. Product Development
Market Research
• 4000 trucks and three-wheeler operators in rural and urban areas were interviewed
• Customers wanted a 4 wheeler as it was viewed as a higher-status vehicle at low cost
• Creating a vehicle that made the driver look good
Product Development
• Tata motors had to create a 4 wheeler at the price of 3 wheeler to create a paradigm shift
in the segment of good movement.
• Product to be useful both in rural and urban areas which can be driven in narrow road & 4
lane highway.
• Should have low maneuverability to get through small by lanes.
• An innovative two cylinder diesel engine concept based on the Indica passenger car’s four-
cylinder engine.
• Costs to be minimized due to parts sharing with other models, and the performance levels
to be just right for the vehicle.
• Engine to fix the excessive noise and vibration levels and worked with a supplier to
develop a rotary fuel-injection pump that could meet emissions standards without
electronic systems, thereby reducing costs and after-sales service complexity.

6. 3. Target Market
Customer Market Segmentation:
• Performance Sensitive – 7%
• Those interested in status. High Brand image and speed of the vehicle.
• Willing to pay higher prices for features
Balanced-Perspective – 25%
• They are majorly entrepreneurs and want a vehicle that has convience features
which would improve their quality of life
ROI sensitive – 55%
• Those who purchase vehicles based on lowest cost per mile of transport
• Do not place value on non-monetary purchase considerations
Acquisition price constraint – 13%
• Who lack credit and financial needs to purchase an even slightly more expensive
vehicle

7. Road Map – Product and Plant
• Establish new assembly plant in North-east India as Pune plant is running at
100% capacity. This will serve three-fold purpose:
• a) Capture 75% of untapped market.
• b) Enter international market like Bangladesh – A country geographically
closer to north-east and demographically similar to India.
• c) Manufacture the new car priced at 1Lakh INR in the new plant.
• Position new variants of Ace which run on CNG in urban areas for intra-city
transfer of goods.
• Position new variants of Ace which are smaller in size and priced competitively
against the auto-rickshaws.
• Position a new variant in the passenger vehicle segment and use it for
transport services.
• Leverage the goodwill generated by Ace to promote the new car which has
been announced.

8. Road Map - Transport Service Sector
• Move into transport service sector(Rural market) to target rented truck
services. This can be done by leveraging the goodwill generated by Ace
sales.
• TATA motors should establish service centers in rural areas and use the
service centers to offer its Ace mini truck [passenger variant] service like
pre-paid taxi/ movers business.
• Existing infrastructure of service network – Dealership.
• Convert 1S to 2S add transport service to sales
• We would use existing Tata motors product hence improving the sales of
other Tata products
• Would increase the brand value of TATA
• Future Scope: Once transport network is established and rural areas grow
FMCG will also add business

9. Thanks !