Tata Motors bucks trend of declining sales

Became second-largest carmaker in December 2021, but can it sustain spot?

Tata Punch

Unlike Maruti Suzuki India and Hyundai Motor India, Tata Motors has bucked the trend of declining sales in recent months due to semiconductor shortage, so much so that in December it even overtook Hyundai to become the second-largest passenger vehicle (PV) manufacturer in terms of despatches.

In December 2021, as per the Society of Indian Automobile Manufacturers, PV sales dropped 13% to 2,19,421 units. Analysts attributed this fall mainly to supply challenges due to the semiconductor shortage. Maruti Suzuki saw sales decline by 12.6% to 1,23,016 units and Hyundai’s sales declined 31.8% to 32,312 units.

However, Tata Motors saw its PV sale growing 49.9% — from 23,545 units in December 2020 to 35,299 units in December 2021. It beat Hyundai during the month.

2021 Tata Tigor EV driving left

“The overwhelming market response to the Punch SUV launched in October 2021, as well as continued demand for most of our models, led to the sales jump,” Shailesh Chandra, managing director, Tata Motors Passenger Vehicles, and Tata Passenger Electric Mobility, told FE. “We also found creative ways of dealing with the chip shortage, and did not let it impact the supply side to a large extent.”

Chandra said CY21 was a record year for the carmaker. “We sold 3,31,178 PVs (highest ever in a year), 99,002 units in Q4CY21 (best quarterly sales) and 35,299 units in December 2021 (best monthly sales),” he said. “We also sold 2,255 EVs in December 2021 (highest-ever EV sales in a month).”

Analysts, however, think it’s tough for Tata Motors to hold on to the second-largest carmaker rank.

“Tata Motors is doing many things right,” said Sanjeev Garg, practice leader, automotive, Praxis Global Alliance. “The demand for SUVs is rising and Tata Motors has a great line-up in the Punch, Nexon, Harrier and Safari — covering the Rs 5 lakh to Rs 20 lakh segment. It is also working on an SUV that fits between the Nexon and the Harrier. The Altroz premium hatchback is selling well too. Going forward, they can get additional volumes of 4,000-5,000 just from their EV business (which Hyundai will not have). Tata Motors also doesn’t have production capacity challenges.”

Tata Tiago CNG

Despite all these factors, Garg is of the opinion that Hyundai will not lose its position. “Hyundai will take back its position if it’s able to reduce the impact of chip shortage on its cars. The Creta has a massive demand,” he said.

Gaurav Vangaal, associate director, IHS Markit, said it appears Tata Motors’ product pipeline is targeted specifically at the Koreans. “There is model-to-model marking,” he said. “Hyundai may not have all-new models (big-sellers) planned in the near future, but its existing models have a massive demand, and Hyundai has become almost synonymous with SUVs.”

In CY21, Hyundai India was the top SUV player, with sales of 2,52,586 SUVs; its Creta had almost half that share (1,25,437 units).

Vangaal, however, added that Tata Motors may have a chance to beat Hyundai in a month or two this year — depending on who better manages supply issues — but the Korean will take back its position.

Maruti Suzuki, he added, is a long shot even for Tata Motors and Hyundai India put together to challenge. “Maruti Suzuki has such a solid product pipeline that it can raise its market share this year,” he said.

While Chandra didn’t comment on whether or not Tata Motors will be able to hold onto its second-largest carmaker position — “We are not chasing numbers,” he said — and added that Tata Motors will remain the EV leader by far.

“The power of the entire Tata Group is behind it (EV strategy), and investors have shown confidence. As we launch our EVs — it offers two EVs in the PV space (Nexon EV and Tigor EV)—in more cities, there will be more confidence among consumers, and word of mouth will spread that EVs are easy to own, charge and run (for example, 96% of our existing EV users charge at home). This will lead to better demand,” Chandra said.

Tata Motors recently entered the CNG space by launching its iCNG technology in two models: the Tiago and the Tigor. CNG sales are rising, and an analyst said Tata Motors can benefit from the fact that Maruti Suzuki’s CNG cars have a long waiting period of about four months, and “so some prospective CNG buyers can shift to Tata Motors”.

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