Home / Companies / After Tiago success, Tata Motors fast tracks work on micro SUV

Mumbai: Tata Motors Ltd is working on a micro sports utility vehicle (SUV) as part of a larger plan to launch new models till 2020, according to three people familiar with the firm’s plans, requesting anonymity.

Code-named X451, the development of the new model, which was conceived in 2013 under a project named “Dolphin", is now being fast-tracked and is set to go into production in 2017-18, said one of the three people cited above, pointing out that the move to expedite the project is driven by the success of the Tiago hatchback.

Tata Motors floated a request-for quotation for the new model among suppliers in June, said the second person aware of the plan.

Tata Motors has been selling 3,000-plus units of Tiago every month since the car’s launch in April and expects to do more with it having aligned supply with demand, said the second person, adding, “They have been quite encouraged by response to the Tiago."

A Tata Motors spokesperson declined to comment. “We do not have any comments on future product plans," she said in an e-mailed response.

After being depressed for several months, sales of Tata Motors passenger vehicles rose 22% to 12,509 units in June from a year ago, the company said on 1 July.

The Tiago propped up passenger-car sales at the firm by 37% to 11,705 units from a year ago.

“Tata Motors hatchback sales grew by over 100% at 7,126 units in June due to strong demand for the recently launched Tiago," the car maker said.

With an SUV-like stance and car-like features, the so-called micro SUV, of which the company plans an initial volume of 25,000-30,000 units, will be targeted at the urban youth and will wean buyers off the compact SUV as well as premium hatchback segment, said the third person. It is likely to be pitted against models like the Maruti Suzuki Baleno and Hyundai i20.

As of now, Mahindra KUV1OO is the only model in the micro SUV segment. Maruti Suzuki’s Ignis, expected to go on sale this festive season, will be another model in the segment.

Puneet Gupta, associate director at IHS Automotive Forecasting, a sales forecast and market researcher, said considering the low incomes and high congestion, hatchbacks will always remain a key model type in the country. But unlike the past, customers now desire premium hatchbacks with a better build quality, comfort, technology and more power. Today, the first-time buyers of bigger compact cars, such as the i20, are as high as 40%, Gupta pointed out.

“We feel the Tata Motors approach to build a superior hatchback can help them regain their lost market share in the growing segment," he added.

The upcoming model will be one among several new product offerings that the Mumbai-based firm is planning to develop on the so-called Advance Modular Platform (AMP), said the second person aware of the plan. The AMP will offer the flexibility to launch multiple models from a single platform.

As part of its Horizon Next strategy, Tata Motors plans to launch a slew of new models every year till 2020 as it seeks to resurrect its position in India’s competitive passenger car market. Besides a negative perception, the business has also suffered because of lack of new models. The Tiago is the company’s first all-new model after the Nano, launched in 2008.

In 2015-16, Tata Motors’ market share in the Indian passenger vehicle segment fell to 5.35% from 6.22% a year earlier.

A sedan based on the Tiago platform, a compact sports utility vehicle called the Nexon and Hexa, a crossover, are some of the other car models that Tata Motors plans to launch before the X451.

Guenter Butschek, chief executive and managing director at Tata Motors, who took over the reins of the company in February, is working on a brand statement that will define the core purpose of the brand, he said at his first media interaction in March.

Butschek has also hired the services of Santosh Desai, managing director and chief executive officer, Future Brands, for a transformation and articulation of the Tata Motors brand, Mint reported on 16 June.

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