Tata Motors Limited (ADR) (NYSE:TTM)

CAPS Rating: 4 out of 5

Owners of Jaguar and Range Rover, India-based Tata Motors designs, manufactures, and sells automobiles and all things machine-related.


Player Avatar spiritof78 (96.56) Submitted: 7/3/2013 11:30:26 AM : Outperform Start Price: $4.58 TTM Score: +673.55

Forget the NANO for a second,while it is important to long term growth and changing the culture of India from one of two wheels to four, the Nano is not how TaTa Motors makes its money. Tata does this by exploiting niche markets; its primary source of revenue comes from heavy duty engines and vehicles. In this market TaTa has a well formed reputation for dependability and function in a market where those are the two core issues. Even looking at their acquisition of Jaguar and Land Rover; but cars appeal to a very specific type of buyer and is not competed against by standard passenger vehicles or even light wheel trucks. The options for substitute goods are few when you consider Luxury Car and Land Rover competing with Jeep. Compound that with a booming Indian Middle Class and what is projected to be the largest domestic car market in the world. Going back to the NANO , its revolutionary, TaTa is using it to start a two way conversation and a relationship with young Indian drivers and would be drivers. They advertise heavily on social media and use commercials that will appeal to young urban professionals; for example their commercial in a rain storm shows two young Indian Couples, one sits comfortably in the NANO and girl leans forward and kisses boy. Next to them and gazing into the drivers window is a couple on a motorbike (the most common form of trans. in India now) boy sees them kissing leans back to his girl who rebuffs him with a look that says "Are you kidding I'm getting soaked by rain here". The trick for TaTa will be if it can transition the college market its pounding with Nano's into adults looking at higher margin domestic cars as their careers progress.

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