Home >companies >Car makers sharpen focus to tap growing taxi market

Mumbai: Car makers in India are adopting a differentiated product strategy to address the burgeoning fleet and taxi market. They are either selling models that are past their prime to this market or positioning their products differently in terms of features and price.

Clearly, they have learnt from the Tata Indica experience, wherein the brand value was eroded by its prominent presence in the taxi segment.

The differentiation is necessary because, unlike in south-east Asian countries such as Thailand and Malaysia, and developed economies, cars that cater to the taxi and fleet market are considered downmarket by individual users in India, said Deepesh Rathore, founder and director of Emerging Market Automotive Advisors (EMAA).

Car makers, therefore, have to come up with a separate strategy to address them. Introducing models that are ageing or have not found traction in the personal-use segment are ways of doing so, said Rathore.

Maruti Suzuki India Ltd, for instance, plans to introduce the Ritz Tour for commercial use, said a person familiar with the company’s plans. He did not want to be identified.

The move, when it happens, will come on the back of the positive response that the Dzire Tour, which addresses the fleet and taxi segment, received. Its sales increased 81% to 6,543 units in the three months to March from the year-ago period.

Hyundai Motor India Ltd, which phased out the i10 to make way for the Grand i10 in 2013, is another case in point. Instead of completely discontinuing the model, the firm chose to introduce the earlier i10 in the taxi market, which was being addressed by the Santro. The strategy, said Rakesh Srivastava, senior vice-president, sales and marketing, was well thought out.

“Unlike the other markets, in India, it’s critical to have a differentiated strategy for the personal and commercial segments to ensure the brand doesn’t get hit," he said.

Such a strategy may have served Tata Motors well a decade ago. Despite its best efforts to re-position its models and innumerable makeovers later, the “taxi" tag has stuck. The firm has chosen to not issue the ‘T’ (tourist) permit for its Zest sedan and Bolt hatchback, launched in August and January, respectively, said Girish Wagh, senior vice-president of product planning and programme management at Tata Motors, in an interaction on the sidelines of the Zest’s launch in August.

Utility vehicles, unlike passenger cars, do not require any differentiation. Toyota Kirloskar Motor Pvt. Ltd, for instance, sells its flagship Innova in both commercial and personal-use segments. The same is not true for its Etios sedan, which is all pervasive in the fleet and taxi segment.

Having faced rejection from individual buyers, the firm pushed the car in the commercial segment. Then, in October, in a bid to resurrect its appeal among individual buyers, Toyota launched a spruced-up model with a host of creature comforts. The makeover, says N. Raja, senior vice-president and director of marketing and sales at the firm, has paid off. There has been a steady increase in Etios sales since, and it’s now averaging 4,500 units a month.

Rathore believes the line between commercial and personal segments will blur as the fleet market expands and customer aspirations grow. Rajiv K. Vij, chief executive at Carzonrent India Pvt. Ltd, one of the largest car rental firms in the country, seconds that view. “Over the past few years, car makers’ engagement has only deepened with firms like ours. They cannot afford to ignore this segment," he said.

Besides offering specific models to suit the needs of a fleet, some car makers have even gone to the extent of offering them tailor-made packages, he added.

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