Tata Motors In Australia: Its Future Direction & Strategies

Introduction

The Automobile industry includes the vehicle manufactures as well as retailers that deal in variety of cars and motor vehicles. This industry is surrounded by vivid stakeholders including car manufacturers, car dealers, part suppliers and mechanics. The prominent players of the Automobile industry are generally engaged in manufacture, research, design sale and maintenance of motor vehicles and their spare parts. The global automobile Industry is indeed evolving at an increased pace with the Australian continent as no exception to the growth (Humad, 2005).

Analysis of the Car Industry in Australia

The automobile industry is of strategic importance to the Australian economy as automobile is the largest manufacturing industry in Australia. This industry supports many other industries such as aluminum, steel, glass, rubber, paint, plastic, electronics and also contributes to the exports of the country. The annual turnover of the Australian Automobile industry exceeds $160 billion and is one of the prominent sources of taxation revenue to the Government of Australia. The Australian automobile industry employs approximately over 4 lakh employees and benefits the local population by offering latest technology automobiles (Federal Chamber of Automobile Industries, 2013). The Automobile industry in Australia also provides leading edge environmental technology for controlling carbon emissions and thereby contributing towards environment conservation. The motor transportation in Australia is also the most preferred transportation for passengers as well as freight carriers outstripping air, maritime and rail modes (Price Waterhouse coopers, 2014). Automobiles are regarded as most easily and affordable means of transport by the local population, and is thus a prominent industry belonging to the Australian economy.

Analysis of Industry Competition and Tata’s Competitive position

Tata Motors, the Indian Automobile brand has sought to come up with a range of ligh commercial vehicles in the Australian Automobile markets, with the help (partnership agreement) of the local Australian Automobile distributor, Fusion Automotive. This partnership would enable Tata motors to enter the Australian competitive markets giving exclusive distribution rights to Fusion Automotive (Collett, 2013).

Let us understand and measure the industry competition of the Australian Automobile industry by analyzing the competitive position of Tata motors, using porter’s five forces model.

Rivalry among existing competitors

There is fierce existing competition in the Australian Automobile industry. Ford Motors, BMW, Hyundai Automobiles, Honda Australia, Ateco Automobiles, Nisan Motor Company, Skoda Australia, Harley Davidson International, Saab Automobile Australia, etc. would be some of the domestic and international competitors to Tata motors Australia.

Threat of the new entrants

The entry cost for setting up a Automobile manufacturing business is very high. Also it would require a good amount of time to gain confidence of the consumers in the Automobile segment. Automobiles being premium goods are preferred to be purchased from well established players by the consumers. Thus, Threat of the new entrants would be considerably low.

Threat of the substitutes

Usage of Public Transportation or cycles by the target customers of the Tata motors in the Australian region would be examples of substitutes. The usage of automobiles however, is the most preferred transport of the local Australian population. This suggests a low risk of threat of substitutes to the company.

Bargaining power of suppliers

Tata motors have over 128 suppliers that supply raw material to the company for manufacturing the Automobiles. Thus, large numbers of suppliers result in overall lower bargaining power of the suppliers that is beneficial for the company (Campbell, 2013).

Bargaining power of Buyers

The existence of multiple Automobile players in the Australian market makes the Bargaining power of Buyers extremely high. Abundant choices available to the target consumers of the company necessitate the need to effectively reach out to its target consumers. The List of recommendations mentioned in the next paragraph would exemplify the same.

Key Recommendations

The International expansion attempt by the Tata motors would definitely be the process that would impact the regional cultures, Tastes and preferences for Automobiles and the methods of Trade and brand communications as well. The following are few of the recommendations for the company that would assist its successful business expansion in the country Australia (Allen Consulting Group, 2013):

Manufacturing and creation of value based Automobiles, as per the preferences of the local consumers of the Australian land.

Aligning the marketing and promotional plan of the company, with the overall strategic plan of the company, desired for expansion in the Australian region.

Concentration on product innovation and quality control, supported by adequate research and development to increase the competency of the automobiles manufactured.

Strengthening the channels of distribution in the country with adequate co-ordination with Fusion Automotive.

Effective Usage of technology and social networking platforms for strengthening the brand image of the company and its product offerings.

Managing effective public relations with media, regulators and other key stakeholders to build a favorable corporate image of the company.

Pursing additional research and development, for coming up with more fuel efficient car models that would synchronize with the social responsibilities of the company.

Conclusion

The overall Automobile industry in Australia including the Tata Motor’s business is lately facing the challenges of volatile raw material costs and fuel prices, stringent government regulations and overall increased competition across the industry. Tata motors are all geared up to bring in innovation and new developments in the Automobile sector of Australia starting with light commercial vehicle segment.

References

Federal Chamber of Automobile Industries, 2013, Australian Automobile Industry, Retrieved on February 4, 2015, from https://www.fcai.com.au/library/publication/fcai6049_full_version_final_(2).pdf

Collett Trevor, 2013, Tata Returning to Australia with light commercial vehicles, The Motor Report TMR, Retrieved on February 4, 2015, from https://www.themotorreport.com.au/56972/tata-motors-to-re-enter-the-australia-market-with-light-commercial-vehicles

The Economic Times, 2013, Tata motors to launch light commercial vehicles in Australia, Retrieved on February 4, 2015, from https://articles.economictimes.indiatimes.com/2013-07-23/news/40749684_1_tata-motors-telcoline-2-2-litre

 Campbell Matt, 2013, Tata to become Australia’s newest ute brand, Drive.com.au, Retrieved on February 4, 2015, from https://www.drive.com.au/motor-news/tata-to-become-australias-newest-ute-brand-20130723-2qfyr.html

Price Waterhouse coopers, 2014, Automobile Industry, Retrieved on February 4, 2015, from https://www.pwc.com.au/industry/automotive-industry/index.htm

Allen Consulting Group, 2013, the strategic role of the Australian Automobile Manufacturing Industry, Report to the Federal Chamber of Automobile Industries, Retrieved on February 4, 2015, from https://www.acilallen.com.au/cms_files/ACILAllen_FCAI_September2013.pdf

Humad Aditya, 2005, Tata Motors Market Buster, Retrieved on February 4, 2015, from https://www.marketbusting.com/casestudies/archives/Tata%20Motors.pdf