Tata Motors SWOT & PESTLE Analysis

Strength

This section is available only in the 'Complete Report' on purchase.

Weakness

This section is available only in the 'Complete Report' on purchase.

Opportunity

1. Increasing per capita income fueling aspiring needs: India’s per capita income stood at Rs 10,534 a month during the financial year ended March 2019 and has been steadily increasing by over the last few years. This has resulted in increased savings and also rise in discretionary spending by the middle class which also has growing aspirations. Tata Motors can capitalize on the potential in the middle-class segment with its new offers like Tiago and Nexon.

2. Tata Motors can tap developing markets in Africa and South East Asia: Emerging markets in Central and East Africa and counties in South East Asia such as Bangladesh, Indonesia and Malaysia have similar demographics have growing demand for entry and mid-segment level automobiles. Nano can use the existing unutilized capacity at its Sanand plant to ramp up production.

3. CNG and electric car models have promising market potential: CNG and electric car models offer a cleaner alternative to internal combustion engines. Though the overall cost of these models is higher than the conventional petrol version, there are government subsidies and tax breaks offered. The overall operating cost of the CNG and electric versions is also lower. With the Government’s incentives supporting EVs, the success of Faster Adoption and Manufacturing of (Hybrid &) Electric vehicles in India – Phase 2 (FAME II), the burgeoning demand for cleaner fuel options, the rising costs of internal combustion engines technologies and the wide adoption of EVs in shared and public transport, India is on its way to achieve a high EV penetration, with an estimated three million vehicles by 2030. These technologies have also seen a surge in popularity and Tata Motors has good opportunity to increase in market share in these product segments. The company is this regard is expected to launch Tata Motors Megapixel its hybrid hatchback car in 2018.

4. Opportunity in shared mobility segment: An increase in the share of electric and autonomous vehicles has led to forecasts that India will emerge as a leader in shared mobility by 2030. The improved mile economics that these vehicles provide are likely to cause shared miles to reach 35% of all miles travelled in the country. It is also expected that this figure will go up to 50% by 2040. In 2017, a total of 257 billion miles were driven in India of which only 10% were shared (including traditional taxis and app-based plays). The Mobility Innovations Hub created by Tata Motors seeks to discover new ways by which its PVs and CVs can contribute better to achieving shared mobility solutions.

Threat

This section is available only in the 'Complete Report' on purchase.

Political

This section is available only in the 'Complete Report' on purchase.

Economic

This section is available only in the 'Complete Report' on purchase.

Social

This section is available only in the 'Complete Report' on purchase.

Technological

This section is available only in the 'Complete Report' on purchase.

Legal

1. Ongoing litigation for the Singur plant with West Bengal government: Tata Motors is subject to an ongoing litigation with the present government of the State of West Bengal in India with regards to the compensation in the Singur land case for Tata Nano. The case at presently is with the Supreme Court of India. The company may need to make fresh provisions in the balance sheet if it loses the case and is unable to recover the cost incurred in Singur.

2. Changes to emission norms in Europe: the WLTP had changes added to the European emissions tests in September 2018 which charged non-compliant models with additional taxes. This not only resulted in consumer uncertainty but also raised manufacturing costs. JLR is one of the few brands that have received type approval of its vehicles within the deadline set out by the WLTP. Its latest Euro VI Ingenium diesel and petrol engines are among the cleanest in the world and so the impact of emissions test changes has been minimal for the brand. the new Range Rover Evoque, the Land Rover Discovery Sport and the refreshed Jaguar XE, are all compliant with the Real Driving Emissions Step 2 (RDE2) standards NOx emissions tests far before the deadline of 2020 given for all new models.

3. Changing environmental regulations in Indian states: Changes in environmental regulations and ban on diesel vehicles in some Indian states may affect Mahindra’s sales. The Delhi government had imposed a temporary ban on registration of new diesel vehicles in 2016 after the city had experienced high levels of pollution. Other states like Maharashtra and West Bengal may also introduce stricter pollution measures. Further the implementation of new emission rules over the next three years will increase the price of diesel cars impacting demand. Mahindra whose major part of the automobile range falls under diesel category will need to come out with petrol variants to retain its market share in the MUV and SUV segment.

4. New axle load norms in India: The permissible GVW of over 16 tonne heavy trucks was increased by 20-25% by the government in 2018. Truck owners can now load their vehicles up to the new allowed limits. Overloading of trucks has thus been legalized, allowing for better utilization of existing assets. The demand for new trucks has thus decreased with almost 92% of the MHCV cargo industry being impacted. Tata Motors has used this new axle load regulation to launch innovative products with changes in many aggregates. This caused the value proposition for customers to increase and also improved the total cost of ownership.

Environmental

This section is available only in the 'Complete Report' on purchase.