Tata Motors to consolidate position in the last mile segment with Magic Mantra
- Pharma firms’ Q2 earnings likely to be subdued on US pricing woes
- Madras HC appoints panel to settle dues of investors
- Stephanie Zacharek: Criticism has become a kind of boutique interest
- SoftBank seen climbing 36% as Masayoshi Son clarifies tech vision
- Chidambaram slams Election Commission for not announcing Gujarat poll dates
Mumbai: Tata Motors Ltd plans to launch the Magic Mantra, an upgraded eight-seater passenger carrier based on the existing Magic platform, in Delhi, Mumbai, Chennai, Kolkata and Bengaluru next month, as it seeks to compete in the auto rickshaw, and black and yellow cabs market.
While the Magic has been running in smaller towns and cities for nearly eight years now, this is the first time that the company is targeting the big metros, said Ravi Pisharody, is executive director, commercial vehicles business at Tata Motors, in an interview on Monday.
Though not in direct competition with Bajaj Auto Ltd’s RE60 quadricycle, Tata Motor’s plans to take the Magic Mantra to big cities could hit Bajaj.
The RE60’s commercial launch has been delayed by over two years now; it can only hit the roads after public interest litigations filed against its launch are disposed of by the Supreme Court. The next hearing is scheduled in October.
Meantime, Tata Motors is moving to get a piece of the so-called last-mile transport market with the Magic Mantra. Last-mile transport involves ferrying air, train or bus passengers from the airport, railway station or bus terminus to their homes or hotels, for instance.
To be priced at around Rs.4.5 lakh (ex-showroo, Mumbai), the Magic Mantra will have higher torque and power and better fuel efficiency and will be powered by a common-rail-diesel-injection engine, said Pisharody. The upgraded model will cater to both inter-city and intra-city transport needs.
Launched in 2007, there are close to 300,000 units of Magic already on Indian roads, transporting 10 million people per day on average across the country, Pisharody said. The vehicle plies mostly in rural and semi-urban areas and is not competing in the last-mile transport market in metros so far.
This is not the first time Tata Motors has attempted to break into this segment which has largely been the preserve of three-wheeler makers such as Bajaj Auto Ltd, TVS Motor Co., and Piaggio Vehicles India Pvt. Ltd.
One of the company’s models, the Iris, a six-seater passenger carrier, plies in several cities on a three-wheeler permit.
“The Magic Iris CNG Bs4 has received permits under the auto rickshaw category in Delhi,” said Pisharody.
Tata Motors is now waiting for fresh auto-rickshaw permits to be released by the Delhi government which have been blocked by a court order, he said.
In order to restrict the number of auto-rickshaws on the roads and check congestion, India’s 14 largest cities including Bangalore, Delhi, Chennai, Hyderabad and Mumbai, have made permits mandatory.
So far, however, the three-wheeler segment has managed to fend off competition from the likes of Tata Motors mainly due to the price gap. The price of an auto rickshaw is nearly 40% lower than the cost of small commercial vehicle passenger offerings.
The three-wheeler manufacturers also have a strong lobby in the form of unions that keep out new entrants.
Any model addressing last-mile connectivity will be in great demand considering the huge demand gap, said.S.P Singh, a senior fellow at the Indian Foundation of Transport Research and Training.
Having said that, with transport being such a highly regulated sector, it will not be smooth sailing for Tata Motors which, Singh said, will have to confront rivals that have a tendency to block new competitors.
The success of the new model, Magic Mantra, which is crucial to company’s plans of targeting the metros will largely depend on new permits being given out.
Breaking into the metros, will not be easy for Tata Motors, said an official at a rival company declining to be identified.
Tata Motors, he said, will have to ensure that the overall operating cost for the owners, which includes the cost per kilometer and fuel efficiency, is better than that offered by the three wheelers.
Sales of small commercial vehicles (those with a gross vehicle weight of less than a tonne) have been on the decline for the last two years as financiers have been reluctant to fund the purchase of these vehicles because of rising defaults by borrowers, Pisharody said.
Sales of Magic declined around 8% to 15,000 units in the first five months of this fiscal year from the year-ago period, he added.