Case Study

  Tata Indica V2 Xeta: Competing in the Indian Small Car Market

This case is about the marketing strategy undertaken by Tata Motors Limited, (the market leader in commercial vehicles in India, and one of the major players in the passenger vehicles segment), in 2006 to sustain and enhance its market share in the burgeoning passenger car market. In January 2006 the company launched the Indica V2 Xeta Petrol (Xeta) car as a refurbished version of its existing petrol car Indica V2 Petrol MPFI. According to the company, Xeta was to benefit the customer by better meeting their needs compared to existing options in the market - specifically by rendering better fuel efficiency at a competitive price. Indica was an umbrella brand under which Tata Motors had developed both diesel and petrol cars.

Though the diesel driven Indica was performing well, its petrol counterpart - Indica V2 Petrol MPFI, had not reaped the intended results. Through Xeta, the company intended to create a unique brand identity in the customer's mind for the petrol variant of Indica.

Immediately after the launch of Xeta in January 2006, the passenger car business unit of Tata Motors reported a growth of 15 percent over January 2005 by selling the highest number of passenger cars till then. The Indica brand grew by 18.7 percent which was attributed mainly to the launch of Xeta. This success also coincided with the growing attractiveness of India as a global hub for small cars. The entry of Tata Motors' immediate rivals like Maruti Udyog Limited and Hyundai Motor India Limited into the diesel segment of the small car market was also expected to pose a strong challenge for the company.

This case discusses the rationale behind the development and launch of the Xeta. It also examines the product, pricing, distribution, and promotional strategies undertaken in this regard and the challenges faced by the company in sustaining its market share in the Indian passenger car market.

Questions :

1. Explain the strategy adopted by Tata Motors to sustain the Indica brand in the highly competitive small car market in India.

2. Explain the rationale behind the launch of Indica V2 Xeta as an extension of the Indica umbrella brand.