It’s been a bumpy drive for automobile companies in the last several months. While passenger vehicle demand has been strong, production and supplies have failed to keep pace due to the acute semiconductor shortage that has affected car makers globally. Not so it may seem for Tata Motors. The homegrown car maker continues to cruise along a smooth highway and, in December, raced ahead of Hyundai Motor to become the second largest car maker in the country in terms of monthly sales.
Tata Motors shipped 35,299 passenger vehicles to its dealers last month, compared to Hyundai’s domestic wholesales of 32,312 units. Tata Motors sales were up 50 per cent year-on-year, while Hyundai’s domestic sales declined 32 per cent. This is the first time since Tata Motors entered the passenger vehicle market that it has become the second largest in the space.
To be fair, Hyundai still remains the second largest car maker in the country, on an annual sales basis. The Korean car maker sold 5.05 lakh units in India in 2021. On the other hand, Tata Motors’ PV sales in the same period stood at around 331,178 units, which was still the highest ever since the inception of the passenger vehicle business.
Also to note is that Hyundai is also one of the largest auto exporters from India. It exported 16,621 units in December and 1.30 lakh units in 2021. Add these figures and Hyundai gains further ground over Tata Motors.
Despite this, the decade high quarterly and monthly sales for Tata Motors suggests it has been making all the right moves. The Harrier, Safari and Nexon sports utility vehicles have found good traction for Tata Motors amid a general industry-wide rise in demand for SUVs in the country. To cash in on this demand further, Tata Motors last year launched the Punch micro-SUV, which also received a strong reception.
Launched only in October, the Punch, which competes with the likes of Mahindra KUV and Nissan Magnite, is already the second most selling product in Tata’s existing portfolio following the Nexon. The Nexon and Punch grabbed the third and sixth position in SUV sales in the country in November.
Analysts say the Punch will help Tata Motors gain market share further in 2022 among ICE (internal combustion engine) vehicles. Separately, Tata Motors’ early aggression in the electric PV segment is also reaping big dividends for the car maker.
“EV sales touched 10,000 units in nine months of FY22 and crossed 2,000 monthly sales landmark for the first time in December 2021 (2,255 units). The ever-increasing demand for Nexon EV and Tigor EV as well as progressive revival of the EV fleet segment were instrumental in driving this steep growth,” said Shailesh Chandra, president, passenger vehicles business unit, Tata Motors.
The company had launched the Nexon EV back in 2020. In 2021, it rolled out the Tigor EV for the passenger segment and the XPRES-T EV for the fleet segment. This has helped it gain a huge leap over rivals, who are either still drawing up plans or offer only one-two EVs in the market, that too in the premium or luxury segment. In December, Tata Motors’ EV sales jumped 439 per cent from a year ago to 2,255 units.
Recent reports suggest that the company is likely to launch the Nexon with a bigger battery, which should give it a longer range, sometime this year. This will certainly give Tata’s EV market share a further boost.
“The new launch of Tigor EV (approved for government’s FAME II subsidy) is likely to improve EV sales, while the recently launched Punch could further aid ICE market share,” said Basudeb Banerjee, research analyst at ICICI Securities.
Buoyed by the strong sales momentum, investors have lapped up Tata Motors shares, which are up 166 per cent over the past one year. In comparison, the BSE Auto index has gained only 20 per cent in the same period.
Despite the stellar performance thus far, worries do remain. Semiconductor supplies will remain key source of uncertainty, said Chandra of Tata Motors. Furthermore, the impact of the new Omicron variant of COVID-19 will need to be closely tracked, he added. Already, coronavirus cases are surging in several states like Maharashtra and Delhi, prompting the governments there to impose fresh set of restrictions.
On Tuesday, broking firm CLSA downgraded Tata Motors shares to “sell” from “buy”. This downgrade was premised on lower valuation for Tata Motors’ domestic PV business, below the valuation ascribed to it by a private equity fund. CLSA also ascribed a lower valuation for Tata Motors’ luxury Jaguar Land Rover unit. The broker cited slower EV ramp up by JLR versus competitors for the same.
Tata Motors shares were down 2 per cent to Rs 487.50 in afternoon trade post the CLSA downgrade.
