Will Bolt add to Tata Motor's muscle power in compact car segment?

Tata Motors on Thursday launched the much-awaited 'Bolt' hatchback to try and pull its sales graph moving upwards again.

Among other frills, the company claims that Bolt is the first hatchback with a multi-drive function, with sport, eco and city modes.

Tata officials said the ninth-generation anti-lock braking system (ABS) from Bosch and the safety feature in corner stability control (CSC) are mostly used in high-end cars.

Mayank Pareek, President, Passenger Vehicles Business Unit, Tata Motors, says that 50,000 customer registrations have been recorded before the launch.

"We are excited. Bolt is offering affordable luxury, which is mostly seen in high-end cars. We look forward to regain the market and reposition the company with this launch." The multi-drive technology is a first in this segment.

Also, the company has tied up with MapMyIndia for the navigation application.

There is a catch, though. Bolt is beautiful and youthful, but not very affordable.

The new hatchback has all the ingredients to tempt aspiring customers. But the price of its petrol variant ranges from Rs 4.66 lakh to Rs 6.35 lakh in Mumbai.

The diesel model is priced around Rs 1 lakh above the petrol - ranging from Rs 5.75 to Rs 7.33 lakh.

That's at par with Maruti Suzuki's Swift, which is the market leader. Swift sells for Rs 4.82 lakh - Rs 6.43 lakh (petrol) and Rs 6.07 lakh- Rs 7.54 lakh (diesel).

Bolt's pricing is a brave strategy, considering that the company has struggled to grow sales of its bread-and-butter Indica and compact sedan Indigo CS, the same category that Bolt will join.

In 2013-14, in its core 'Compact' category - comprising Indica and compact sedan Indigo CS - Tata Motors' sales fell 26 per cent.

In the previous fiscal, sales in the segment had fallen 30 per cent.

For perspective, the company sold more than 163,000 cars in 2011-12, and that number almost halved to just over 83,000 in two years.

The launch of the company's new compact sedan, Zest, in September 2014 halted that slide.

Since launch, Tata Motors' sales in the 'Compact' category has risen - its total sales in the April-December 2014 period is marginally lower than April-December 2013.

However, delayed supply from vendors has resulted in long waiting periods of 4-6 months for buyers, which has put a spanner in the works.

Can the Bolt add to the company's muscle in the Compact segment? The jury is out on that one, but the problem is, Bolt resembles the Indica from some angles.

Given the falling sales of Indica and the fact that it is largely seen as a taxi, might work to Bolt's disadvantage.

The car's marketing will need to be powerfully driven, with a conscious effort to differentiate from Indica.

Mahantesh Sabarad, Deputy Head of Research at SBI-Cap Securities says that Bolt is not a new product altogether. "It is a continuation to Vista and Indica. But the product is good like Zest."

For now, the Bolt-launch has boosted Tata Motors' share price by 2.7 per cent on Thursday on BSE to Rs 566.30, while BSE Sensex registered a moderate 0.41 per cent rise at end of day.