TATA Ace's growth to 1 Lakh Crore 🐘
& Insights on category creation.
Welcome to the 176th edition of the GrowthX Newsletter. Every Tuesday & Thursday I write a piece on startups & business growth. Today’s piece is going to 95,200+ operators & leaders from startups like Google, Stripe, Swiggy, Razorpay, CRED & more
2005: TATA launched ‘Ace’ 🐘
2023: 25,00,000+ units sold 💰
How “Chota” Haathi became huge ⬇️
What’s a mini truck? 🙇🏻
A motor vehicle meeting the requirements of the Japanese "Kei Jidosha" classification used primarily for transportation, has four wheels and an engine displacement of ≤ 660cc.
Some context 🗓
Back in the early 2000s, the market was filled with popular 3-wheelers that were used to transport goods within a 100 km radius of city centers. They were cheaper to buy/maintain and had high ROI on money invested.
The category was exploding 🚀
Commercial transport focused 3 wheelers sales had 3X’ed from 2001 to 2005 → The product had increasing → it was the right moment.
So why launch a mini truck? 🚚
India is a price-sensitive market. The smaller vehicles did not allow large tonnage capacity (even though they were fuel-efficient). Higher tonnage meant increased earnings per KiloMeter. Earnings matter everything else in this category.
The India/Bharat specific nuance → 3 wheelers were perfect for narrow lanes in busy city/ village roads. TATA Ace ensured it’s almost identical to these 3-wheelers regarding the vehicle width.
And, there was another insight → These 3-wheeler owners wanted to elevate their social status, and they couldn’t afford to buy a passenger car. TATA Ace gave them both - a passenger car for two and a truck body for goods.
The first-time entrepreneur targeting 🎯
More than 50% of all TATA Ace owners are first-time entrepreneurs. It sold the whole financial freedom dream well and delivered on it.
Strong tailwinds to the category 🤯
E-commerce's last mile became synonymous with TATA Ace. Large B2B orders created the right perceived value for the category and of course, its leader. Most other commercial automobile manufacturers missed the bus here.
However, by 2017, market leaders like Mahindra, Bajaj & Maruti started producing their own SCV models, which split the market and took the lead away from TATA. But the category build did make majority of money over the last few decades.
That’s all for TATA Ace ✨
Interestingly, TATA Ace’s engine is similar to that of a TATA Nano one (~700 cc / 2-cylinder engineer). One was sold for goods transport & the other was sold as the cheapest car in India. Both have a completely different destiny.
In a parallel universe, TATA Nano being sold as a secondary family car for city traffic would have done wonders. The opportunity was massive but the market wedge & the pitch (cheapest car) made it car for the poor - again in hindsight.
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