Will pricing strategy of Tata Motors bring Tiago's success to Tigor?

Tata Motors on Wednesday launched its latest car the Tigor at a starting price of Rs 4.70 lakh (ex-showroom Delhi). 

The sub-compact sedan is essentially a Tiago with a larger boot as it is based on the platform used by the Tiago. 

The #TigorStyleback – priced at Rs. 4.70* lakhs *(ex-showroom price Delhi), excluding taxes and Octroi. Stay tuned for more. pic.twitter.com/UpceTS571u

— Tata Motors (@TataMotors) March 29, 2017

Tata Motors will sell Tigor petrol version for an introductory price starting from Rs 4.70 lakh in Delhi, says CEO Guenter Butschek in Mumbai. The company will also sell the diesel version of the car for an introductory price starting from Rs 5.60 lakh in Delhi.

At this price, Tata Motors has undercut the price of the Tigor by Rs 54,000 to Rs 83,000.

While the Dzire is priced at Rs 5.35 lakh (ex-showroom Delhi), the VW Ameo costs Rs 5.24 lakh (ex-showroom Delhi), Honda Amaze Rs 5.53 lakh (ex-showroom Delhi), Ford Figo Aspire Rs 5.39 lakh (ex-showroom Delhi) and Hyundai Xcent Rs 5.44 lakh (ex-showroom Delhi).

Tata Motors expects this price advantage to work to its advantage. It had done the same for the launch of Tiago, which had worked well for the car as it is the highest selling model for the company domestically.

Tiago was launched at a price of Rs 3.2 lakh (ex-showroom New Delhi). This was much cheaper in comparison to its competitors such as the Maruti Suzuki Celerio priced at Rs 4.03 lakh (ex-showroom Delhi), Hyundai Grand i10 at Rs 4.85 lakh (ex-showroom Delhi) and Honda Brio at Rs 4.38 lakh (ex-showroom Delhi).

This made the Tiago cheaper by Rs 1.65 lakh to Rs 83,000 to its competitors. The strategy worked for Tata Motors as the Tiago now sells over 5,000 units every month.

Tata Motors is definitely hoping that the price advantage will give the Tigor an edge into the market which is dominated by Maruti Suzuki Swift Dzire and the Hyundai Xcent. The Maruti Suzuki Swift Dzire has 58% share in the segment. While the compact sedan segment registers sales of 30,000 units on an average per month, the Dzire accounts for around 17,000-18,000 units per month of this.

Hyundai Xcent accounts for around 3,500-4,000 units in sales on an average during a month. Honda Amaze around 3,000-3,500 units on an average per month, Ford Figo Aspire around 2,000 units per month and Volkswagen's Ameo accounts for around 1,500 units sold per month.

The C1 sedan segment sales remained flat in February at 33,515 units. This included 16,613 units of Dzire, 3,348 units of Xcent, 3,924 untis sold of Amaze, 1,926 units sold of Ford Figo Aspire and 1,747 units sold of Volkswagen Ameo.

In terms of specifications, the Tata Tigor is very similar specifications to the other cars in its segment. It's revotron 1.2L 3-cylinder petrol engine delivers an optimum power of 85ps and a maximum torque of 114Nm. The Maruti Suzuki Swift Dzire with 1.2 litre 4 cylinder engine that dishes out a power of 84.3 BHP. The VW Ameo has a 1.2 litre 3 cyclined engine with lesser power of 75 BHP. Both Honda Amaze and Ford Figo Aspire have higher power engines with 1.2 litre 4 cylinder engine with power of 88BHP. The Hyundai Xcent, on the other hand, has a 1.1 litre 3 cyclinder engine with 72 BHP.