How TATA beat global giants with Indigenous LCVs
In the mid-80s, apart from Suzuki, some other Japanese brands, perhaps better known globally than Suzuki, also entered India. As was required at the time, all of these entered through joint ventures to provide quality trucks in the much-needed sub-10-ton commercial vehicle segment. The category was referred to as LCVs – Light Commercial Vehicles. Before these trucks arrived, Indian freight operators had limited options in this category.
As India developed, albeit slowly due to the License Raj and a semi-open economy, the need for smaller trucks to ply city roads and make inter-city trips with smaller payloads also grew. The available trucks from Tata and Ashok Leyland were larger and not suited for smaller workloads. Essentially, no product offerings met this need for Indian businesspeople who depended on truck operators to transport their goods.
To address this significant gap in the country’s supply chain, the government encouraged the introduction of four light trucks. The Indian government, known for its protectionist policies, deserves credit for allowing four collaborations to proceed simultaneously. Perhaps the realization of the massive market and the benefits of competition for customers drove this decision. The number “4” for joint ventures is interesting. Around the same time, the Indian government also permitted four motorcycle-manufacturing collaborations with Honda, Yamaha, Suzuki, and Kawasaki. The first Japanese collaboration, with Suzuki, to manufacture passenger cars remained exclusive for a decade, which made sense at the time because cars were still considered a luxury.
The Nissan Cabstar had an innovative anti-theft feature. It was the first Diesel vehicle in India that couldn’t be started without its key.
DCM Toyota – Collaboration between DCM Group India and Toyota, Japan. The truck was called Dyna. A mini-bus version, the Dyna Clipper, was also produced. Toyota has since also started passenger car and SUV production in India under a different agreement, which has been highly successful.
Swaraj Mazda – Collaboration between the Swaraj Group India and Mazda, Japan. Swaraj was already in the automotive sector with tractors. Though they started with trucks, buses made on the same platform gained more popularity than trucks as staff vehicles for several companies. Mazda has not entered India for passenger or commercial vehicles since then. It is one of the few manufacturers that has resisted going into this market.
Eicher Mitsubishi – Collaboration between Eicher Group India and Mitsubishi, Japan. Eicher also manufactured tractors. The truck they produced was named Canter. It turned out to be the most successful of the four ventures. A small bus built on the Canter platform also gained decent traction, with adoption by schools, factories, and other institutions. The Canter was the only truck that participated in rallies. Mitsubishi also entered the Indian passenger vehicle segment with its Lancer midsize sedan through a joint collaboration with Hindustan Motors. That collaboration was short-lived, and so was Mitsubishi’s stay in India.
Allwyn Nissan – Collaboration between Allwyn Group India and Nissan Japan. The Allwyn Group was also involved in automobile manufacturing, specifically two-wheeler production. This truck was called the Cabstar and was the smallest of the four. It was also available as a minibus. Nissan has also entered the Indian market to produce smaller passenger cars, such as the Micra.
The boost to the economy from these trucks was noteworthy. It increased business owners’ purchasing power and enabled faster delivery of perishable goods.
The Toyota, Mazda, and Mitsubishi trucks were very similar in their dimensions and payload. The Nissan Cabstar, though smaller, wasn’t much cheaper. It created a niche market for customized luxury vans; however, it ultimately failed to achieve significant success. It also had an innovative anti-theft feature. It was the first Diesel vehicle in India that couldn’t be started without its key. Many people may find this bit interesting. A diesel engine, a compression-ignition engine, doesn’t need an electric spark to ignite the fuel. All diesel vehicles produced in India up to this point could simply be started by pushing.
The introduction of these LCVs created an entirely new transportation sector. Because owning and operating these trucks cost less than full-sized ones, smaller businesses could own trucks for their own needs for the first time.
The boost to the economy from these trucks was noteworthy. It increased business owners’ purchasing power and enabled faster delivery of perishable goods. This helped farmers and dairy producers immensely. Wholesalers and distributors began establishing new B2B supply routes to retailers in small towns and villages, thereby opening up new markets. CPG manufacturers could now advertise and sell their products nationwide.
Not only goods, but also life-saving medicines and ambulances, began making their way to such places. Overall, this improved the quality of life for people in smaller towns and villages.
The success of these small trucks didn’t go unnoticed by the incumbents, Tata and Ashok Leyland. Tata quickly responded with the Tata 407, followed soon after by its slightly bigger brother, the Tata 608. Both of these were smaller than the Japanese trucks from Toyota, Mazda, and Mitsubishi. If I recall correctly, the 407 was about the same size as, or even slightly smaller than, the Cabstar. But both were instant hits and immensely popular. Tata knew the Indian market for decades. They knew cost and value mattered for the target customer segment. Their trucks required smaller upfront investments, were cheaper to maintain because of locally made parts, and their size made them a perfect fit for both congested inner-city roads and intercity deliveries.
Tata had a decades-long headstart in the trucking industry. They knew the market better than their competitors.
Developing and launching a brand-new vehicle typically requires several years for any manufacturer. Particularly in 1980s India, where R&D facilities were limited, technological knowledge was scarce, and quality standards were poor, the government had to seek collaboration with the Japanese to bring quality trucks to this segment. It is ironic, then, that Tata launched the 407 almost overnight through indigenous efforts. The design wasn’t truly in-house. These trucks resembled smaller Mercedes trucks, a lineage Tata had followed since its early days. But that’s where the similarities ended. The trucks were designed and built entirely in India.
The success enjoyed by the 407 and the 608 was unprecedented. Their immense popularity exceeded everyone’s expectations. To the point that of the four Japanese rivals, only the Mitsubishi Canter could survive for a few years against them.
How could Tata produce two winners in-house while the well-known Japanese brands struggled and ultimately quit? The answer lies in their history. Tata had a decades-long head start in the trucking industry. They knew the market better than their competitors. While manufacturing the Japanese trucks required setting up entirely new factories and supplier networks, Tata already had the infrastructure in place. Tata also had a robust sales and service network across the country.
In contrast, the companies that collaborated with the Japanese manufacturers had never built commercial vehicles in India. They began by assembling Japanese trucks while gradually building local manufacturing and service infrastructure. They simply couldn’t match Tata’s combination of price, product quality, and service availability.
As an automotive manufacturer, Tata has consistently shown resilience and the ability to compete with foreign rivals across various segments. The small-truck category was the initial focus of this move, which later expanded to personal cars and now also encompasses EVs. The opening of the economy in the 90s brought leading global manufacturers to India. Many have since made India their export hub. You can now buy the world’s leading brands in India. But even in a crowded market, Tata has remained competitive and continues to produce vehicles for most consumer segments.
