[pqr]

2024 Case Study: Rise of Tata Punch to #1 Ranking in India

2021: Tata Punch Market Entry



Punch was launched in October 2021, the very same month when it was awarded a 5-star rating for adult-occupant-protection after a frontal ODB crash test conducted by GNCAP under the old protocol. Punch was the second car to be based on Tata’s ALFA platform after the Altroz 4m-hatchback. At the time of launch, Punch was offered with a lone 1.2L three-cylinder naturally aspirated petrol engine mated to 5 MT or an option of 5 AMT semi-automatic transmission, priced between ₹ 5.5 and 9.4 lakh.

Tata Punch positioning



With crossover styling, Punch brought a new sub-segment of ~3.8m crossover into proper existence under the sub-4m umbrella. To make things simple, Punch is basically a Tiago-hatchback equivalent in the crossover segment, with higher ground clearance, an upright seating position, a commanding view outside, SUV styling, and sitting a level below its sibling Nexon, which is just under 4m in length.

The Hyundai Exter is its only direct rival right now in terms of footprint and pricing. Though there is a clear distinction in segments, as can be seen in the graph above, however, based on customer need and budget, low-end 4m-crossovers also come in close proximity, like the Nissan Magnite, Renault Kiger, and Maruti Fronx.

Tata Punch sales growth trajectory



Soon after launch, Punch gained traction, started selling consistently over 10,000 units a month with a petrol-only option, and secured the top-10 rank for itself.

In August 2023, Tata introduced a dual-tank CNG option on the 1.2L 5 MT version priced between ₹ 7.1 and 9.7 lakh. From this time on, the entire Punch lineup was available with the option of a single glass pane openable sunroof. The CNG option took some sales away from the petrol version; however, it added 6,000 units’ of incremental sales a month. Thus moving Punch to the top-5 ranking in the last quarter of 2023.



Early in 2024, Tata introduced an electric version of the Punch with a dual battery pack option, each mated to a separate motor, priced between ₹ 11 and 15.5 lakh. Major changes to the Tata Nexon EV Facelift-2 battery pack were dubbed the Gen-2 EV architecture by Tata.

Essentially, the floor pan and central tunnel are highly modified w.r.t ICE-based ALFA platform to accommodate the battery pack under the floor. The front portion was given a complete facelift in line with the Tata Nexon EV facelift-2; the side and rear profiles remained the same. Interiors were thoroughly revised, with new features trickling down from the Nexon EV. Punch EV version has added another 2,800 units per month of incremental volume to overall sales, thus making it #1 in Q1-2024.

Product innovation driving sales



Exterior design and SUV stance: Tata here has been very successful in what other competitors were not able to achieve when it comes to compact SUV stance and appealing design for ~3.8m footprint. This has been the biggest driving factor behind Punch’s success from the get-go.

Packaging: Punch has always been at the forefront of innovation in several areas. Clever packaging and an upright dashboard, pushed all the way forward, ensured a lot of in-cabin space for a car with ~3.8m long footprint. Upright seating posture gave occupants a good commanding view, sought after in SUVs, and 90-degree opening doors ensured practicality of ingress or egress.

Safety badge: Sans Tata Safari and Harrier, safety already became a hallmark for Tata products by 2021. Punch achieved the best score by GNCAP under the old protocol just before launch in October 2021. That also added to the overall value proposition for a new breed of safety-conscious customers, especially when women in the family are key influencers in car purchase decisions.

CNG kit: 2023 saw a major update in the form of the CNG dual-tank and sunroof exhibited earlier at Auto Expo 2023. A major pain point in a car with a conventional CNG kit is the lack of usable boot space, which has never been addressed by any car maker. And here comes innovation from Tata Motors. 60L (water equivalent) conventional CNG tank was split into two 30L smaller tanks fitted next to each other, occupying spare wheel well space, thus liberating generous boot space above, and the spare wheel was moved underside. Dual CNG tanks mean higher cost, as there will be more surface area of tanks and additional valves and pipes, however, additional boot space is the value that Tata is able to deliver to customers that competitors couldn’t. That has adversely impacted sales of its direct rival Hyundai Exter with 60L single-cylinder CNG kit, as Hyundai has to sell that version at a discount.

Sunroof: Sunroof has always had a vanity value for Indian customers, irrespective of its functional value in the Indian context. And Tata was not hesitant to be the first to add a single-pane sunroof to a smaller car. Adding a feature that is high on the customer value driver list is always a clever move.

EV architecture on the ICE platform: Using the existing ICE platform to underpin EV is a highly cost-effective and risk-averse way of developing BEV cars for a market that is in a nascent stage of growth and customers are highly value-conscious. This is because the investment level is on the lower side due to shared-platform cost synergy, and if demand doesn’t pick up for EVs in general and not from the product per se, automakers can continue to sell the same car with other fuel options in their portfolio. The downside is also there in terms of the of the lack of flexibility in packaging batteries underneath the floor and in the in the fuel tank area. Here, Tata has had effective packaging in terms of space utilisation under the floor as well as the central tunnel zone. The end result is a low investment EV product with a quick-to-market presence. A win-win for customers and Tata Motors for staying competitive in the short and medium term.

Technological gaps that must be addressed

Having said all that, Tata still doesn’t have a best-in-segment or inspiring drivetrain option in the market. Maruti still has the best four-cylinder 1.2L naturally aspirated petrol engine that is highly efficient, relatively refined, trouble-free, and nice to drive. Maruti’s CNG offering continues to offer best-in-class fuel efficiency.

EVs still remain largely uncontested space for Tata so far. Since a large majority of EV components come from China, the competitive advantage of current Tata EV products could be vulnerable in the long term. After all, the ‘Kitna deti hai’ adage is going to be more prominent in the EV world than ever, whether Shailesh Chandra likes it or not.

In short, Tata still has a long way to go when it comes to in-house-developed drivetrain technology. That’s the reason why they lobby hard against complex technological innovations like hybrids.

Disruptive concept: From definitive SUV design to small crossover innovation



Brute, imposing, and intimidating are some of the words generously used for large SUVs, like the ones shown above, that Indians have been used to looking at over the last two decades. Proper embodiment of these words underpinned the success of Mahindra Scorpio in India.

But then it was not accessible to many, either due to its size, price, or practicality; however, the aspiration to own one as a status symbol always existed. So some marketers decided to sell the ‘piece’ of Scorpio’s success—that very sense of aspiration—in a more practical and accessible form by making it small yet proportionate and using monocoque construction for better practicality in an urban environment. Since these SUVs were bought mostly as 4x2, off-road credibility as the defining character of SUVs was never considered for crossovers in India. The idea was to deliver a ‘form’ factor rather than a 'substance’.

SUV concept embodiment trial in ~4m footprint



Initial attempts, though, never met any success in that very decade. Designers, engineers, and marketers could not get the entire packaging right for India. The Ford Fusion was overpriced, the Premier Rio was just a cheap Chinese CKD product, and the Mahindra Quanto (ladder-frame chassis) had a horrible design.

~4m Crossover concept success



The very first time someone got everything right on the sub-4m side, unique to the Indian taxation requirement, was the Ford Ecosport with absolutely right SUV proportions, under ~4m footprint. Maruti further improvised it with a Range Rover-inspired Brezza, and later Tata re-cast the mould with a coupe-inspired Nexon.

SUV concept embodiment trial – ~3.8m footprint



Still, there was no breakthrough in a segment below 4m (~3.8m) where hatchbacks were still thriving. Mahindra attempted hatchback-SUVfication with the KUV 100 but failed due to several reasons, mostly design-related. Despite success in 4m-segment with Brezza, Maruti continuously failed with contraptions like Ignis and S Presso. The audience simply refused to call it a ‘piece’ of SUV, even remotely.

~3.8m Crossover concept success



But out of nowhere, Renault's Kwid’s unique styling stirred a hornet's nest in the hatchback category. A car having a footprint bigger than the Maruti Wagon R, priced against the Maruti Alto, with very appealing SUV-like styling that includes muscular cladding and a slightly upright stance. But then neither envious Maruti nor Hyundai could bring a worthy contender, and complacent Renault, with poor product-life-cycle management skills, let the Kwid sink after the initial hype was over.

Six years after that, Tata was able to crack the ~3.8m crossover segment by packaging the Punch just right in terms of overall styling, SUV stance, and carving out generous in-cabin space. And to sustain the initial success, Tata has been innovative with Punch all throughout, and that’s how it reached the #1 position in the Indian market.

Perplexing consumer behavior



Sometimes, something doesn’t add up! The Hyundai Exter looks fine from the front, and from the side view, under the shoulder line, it is still palatable. But the overall roof line, C pillar, and rear end design have reminiscence of the ugly Mahindra KUV 100. It wouldn’t have successfully passed the static customer clinic (market research technique) likability test when Tata Punch was also a benchmark car, yet Exter is selling in quite good numbers.



And who knew that boxy design could prove to be a blessing in disguise for the Wagon R, which became the best-selling car in 2021 and 2022? An unaided questionnaire of customer clinic results shows that the 2018 generation Wagon R, due to its boxy design and slightly muscular wheel arches, resembles the silhouette of an SUV to general respondents. Unassumingly, that wagon shape, as the name also suggests, has been working in Wagon R’s favour now, given how the love for SUV silhouettes is growing in India.

SUV-inspired ‘form’ and ‘design direction’ are the present and future of the Indian car industry. Marketers, designers, and engineers should focus on innovation to meet consumers’s ‘needs’, ‘wants', and ‘aspirations’, as they did in the case of Tata Punch!

Image source: TeamBHP, Carwale.com, GNCAP, findblueprints.com & Tata Motors website.

[shortbread]

While the success of the Punch and the senior longstanding stalwart Nexon is impressive, it's astounding how Tata is comfortable with the Altroz's underachieving sales?

Altorz has a comprehensive line-up of petrol, turbo-petrol, CNG, diesel powerplants and manual and auto gearboxes, there's an Altroz variant for most people looking to buy a car in this particular segment. Nearly 5 years since launch and the car has not had a major facelift/relaunch. The i20 outsells the Altroz and let's not even talk about the Baleno (backed by a timely facelift) that beats it by 3:1! It's a low lying fruit for Tata, but clueless as to why they're laggard in plucking it? Needs a facelift and a well marketed relaunch desperately!

Also why not repackage the bigger and short-lived (albeit well packaged/engineered) Bolt/Zest as the next generation Tiago/Tigor with a new top-hat? They were bigger cars but served similar client profiles. Tiago/Tigor is almost a decade old now.

Tata's big Achilles heel is it's really small model line up and absence in many important segments. Which means they must be on the ball in segments they're currently present in. The Punch being no.1 is a great feat no doubt, but I'm not sure for how long as this is something Maruti will never take lightly. Tata cannot rest on it's laurels even for a brief moment.

[Ananthang]

Rear seat of Punch is very comfortable and better than Venue,Breeza. It can easily hold 3 adults, fair thigh support and not too tall

For middle class who want to buy their first car, they are not hesitating if it offers good space, easy to drive at a slightly higher cost

Punch is successful because it is a VFM

[GTO]

Great analysis, PQR . Thanks for sharing. We all learn from your threads.

Originally Posted by shortbread

While the success of the Punch and the senior longstanding stalwart Nexon is impressive, it's astounding how Tata is comfortable with the Altroz's underachieving sales?

The Altroz is a decent performer at ~5000 units / month. But yes, it can definitely do better when you consider the sheer competence of the car. Heck, you can buy an Altroz DCT for the same money as a Punch AMT. Plus, compared to the Punch's weak petrol motor, the Altroz has superior turbo-petrol & turbo-diesel options.

I think it's the market's fascination with crossovers. The Altroz is squeezed between the Punch on one side & the Nexon on the other. Even Hyundai's i20 dropped to 5000 units in Feb 24. Maruti hatchbacks are the only ones that sell in 5-digits now.

Agree with you that the Altroz can do better with updates to the car & more aggressive marketing.

[Kosfactor]

Value proposition of Punch is incredible.

It is priced ~same as the largest selling car - Baleno quadruplets.



While Baleno is has its merits, the SUV ownership of Punch is certainly very attractive.

[Mr.Beat]

Fantastic analysis! Thank you, pqr.

I think credit is due to Tata Motors for developing a product based on market knowledge of Indian consumers' preference for SUVs or SUV-like products. They've marketed it very well, added innovations like the split CNG tank, and incorporated market requirements such as CNG and EV options, making the product attractive to almost any new car buyer. While the product may not be perfect, it follows a very Maruti-like approach: providing exactly what the customer is looking for and omitting things that customers don't consider dealbreakers.

Regarding the question of whether the Altroz is a laggard, it's more about the shifting consumer preferences towards SUV-ish body styles instead of traditional hatchbacks

[Phantom 510]

Great package it looks good, packs in space, solidly built, EV option. Hope Tata Motors does something about the engine. I don't know why they don't plonk the previous 1.05L 3-pot revotorq diesel under it's bonnet. Such a nice engine that was from what I could remember. Even the owner's are aware about it. Many people (who owned Maruti previously) who owns it have agreed that it's 1.2L revotron is it's Achilles heel in a otherwise great package. Hope Tata does something soon atleast for the people who have been driving for decades now.

[ergon_9700]

Originally Posted by Phantom 510

Great package it looks good, packs in space, solidly built, EV option. Hope Tata Motors does something about the engine. I don't know why they don't plonk the previous 1.05L 3-pot revotorq diesel under it's bonnet. Such a nice engine that was from what I could remember. Even the owner's are aware about it. Many people (who owned Maruti previously) who owns it have agreed that it's 1.2L revotron is it's Achilles heel in a otherwise great package. Hope Tata does something soon atleast for the people who have been driving for decades now.

The 1.05 was discontinued upon BS6 kicking in. There is a rumour that they may put in a turno engine. If it is the TGDI or the current one not sure. Would like to clarify that it is just a rumour.

[shortbread]

Originally Posted by Phantom 510

Hope Tata Motors does something about the engine.

We purchased a Punch for my dad . It's no performance car, but on the multiple occasions I have driven it, the engine has delivered more than enough power in my opinion. Would I like more power? Of course, who wouldn't, but the Punch is in no way underpowered. Actually it's power is low down which makes it perfect in the city, which is where he predominantly use it. Not being a turbo petrol it's fairly frugal as well.

While comparing with the stalwart of the small car segment ie. Suzuki, there's no doubt they make more spirited engines. BUT let's not forget the huge advantage of Suzukis, they're lightweight in comparison to Tata models.

Kerb weight comparison:
Maruti Suzuki S-Presso: 720kgs
Maruti Ignis: 850kgs
Tata Punch: 1 TON

Heck, the Punch is heavier than the much bigger Baleno! Tata's 1.2 Revotron would be a different beast if plonked into a 700 odd kilos Spresso.

[V0id2003]

I think design is something that has always been the main reason behind Tata's sales along with the tank like build quality ofcourse




A few more examples here, I think usually Tata ends up having the best looking car in the segment. 3.8m with the Punch , Altroz in the premium hatchbacks and Harrier in the 4.6m segment. The looks alone give you that feel good experience many customers look for and that reassuring build also helps. But I must say that awesome build quality carriers the weight penalty making the cars not that brisk to drive , they feel a bit lethargic

[anjan_c2007]

We had for more than two decades waited and waited for Tata Motors to leave an imprint in the car market with a best seller. They have launched several models but most of these failed to click.

With the Punch, Tata's day has come!

[Phantom 510]

Originally Posted by shortbread

We purchased a Punch for my dad . It's no performance car, but on the multiple occasions I have driven it, the engine has delivered more than enough power in my opinion. Would I like more power? Of course, who wouldn't, but the Punch is in no way underpowered.

Congratulations for the purchase you made. It's a great car no two ways about it. I am sure you have put your hard earned money on the right car. However, the word underpowered was not not used a single time in my reply. I neither spoke about the power to weight ratio nor 0-100 kmph times. It's all about how well the power is being delivered. The 1.2L revotron doesn't do that well. Not noticeable to the first timers but people with fair amount of driving experience (like yourself) can notice that. Forget 1.2L revotron not even a single 1.2L Nat asp in our country is a fire breathing dragstrip runner and that's not the purpose but to be reliable, refined, practical and efficient on daily basis which is a tough act to follow. No one does it better than Maruti Suzuki when it comes to small capacity nat asp engines in the country. Be it their reliability, refinement, fuelling, power delivery and well judged gear ratios. Trust me the Punch will be transformed if you plonk their 1.2L K-series under it's bonnet. On the contrary the Punch will thank you if you do that (pun intended). I can understand the love for your car like all of us out here and I respect that. Cheers!

[Asish_VK]

Tata got most of the boxes ticked with Punch which the market wants.

Design- Check. Punch got an attractive & "SUV' design which market just love.
Safety - Check
Manual & Automatic (AMT) - Check
High ground clearance - Check
Seating comfort - Check
Ride comfort - Check
Features - Check
CNG - Check
Electric - Check

Only weak link was the 3cylinder engine, but for most of the buyers it doesn't even matter. Actually Punch have enough pep for city use.
Not mentioning A.S.S since it's a mixed bag.

[Himanshu809]

Bought a Punch.ev LR (Adventure) in March. Enjoying it thoroughly. Gives me 250-300 kms of range on a full charge and honestly it’s a blessing for my daily Delhi-Gurgaon-Delhi commute.

Out of all the cars in the household, it has become the favourite city car.

[Bhodrolok]

We are contemplating a Punch.ev LR for my wife who currently drives a Grand i10 for her work commute and city drives. I did a short test drive and I must say I was impressed with how it drives, the drive as well as features.

Although 15 lacs is quite steep for a car of the size, it still feels decent value for the money. The only worry is Tata's quality control and later on the service experience.