Tata Motors gears up to cross M&M in domestic passenger vehicle sales

Tata Motors, which recently overtook Japanese carmaker Honda to emerge as the fourth-largest player in the domestic passenger vehicles (cars, utility vehicles, and vans) market, says it could rise to the third spot by overtaking M&M any day. The country's largest automaker by revenue has narrowed the gap with Mahindra & Mahindra (M&M) on the back of a strong double-digit growth in volumes. 

In the first half of FY19, Tata Motors' domestic PV sales has expanded over 31 per cent to 106,865 units (from 81,417 units last year) helped by products such as the Tiago and Nexon. By comparison, M&M’s sales in the PV segment has remained flat in the first six months of the year at 121,729 units. "We can change the position any day to become the third player in domestic market. We have grown at a rate higher than the industry for 32 months consecutively and October will be another such month. In the first half of FY19, the industry average growth is 7 per cent while Tata Motors has grown by 31 per cent. In Q2, the industry declined by 3 per cent and all the players, except Tata Motors, decreased,” Mayank Pareek, president of passenger vehicle business at Tata Motors, told Business Standard. 

According to Pareek, the company must have done something different right to deliver this performance. "The argument that we are growing on a low base is no longer valid because we are now the fourth-largest player,” he said. In early 2017, the firm had talked about its ambition to become the third-largest player by 2019. It was 5th then and subsequently moved up one spot to fourth. 

The firm, while expanding volume, has been focused on making the PV business profitable. The segment posted an earnings before interest, tax, depreciation and amortization (Ebitda) loss of just Rs 250 million in April-June quarter of FY19 compared to a high corresponding number of Rs 4.61 billion in FY18. Pareek said the company was on track to deliver according to plans. "I have achieved my business target in H1 and will do that in H2. You will see the outcome in the sales, top line, and bottom line,” he said. 

Though it may emerge as the third-largest player, the company may not find it easy to reclaim its long-lost position of second-biggest segment player. Hyundai now enjoys that position while Maruti Suzuki is the market leader. Pareek said the issue was not about becoming the second- or third-largest player. “We want to remain in the consideration of buyers with our offers. We knew there would be headwinds this festival season. We decided to bring four product interventions. These are aimed at creating a talk point in the market and giving customers a reason to buy,” he said.

Tata Motors' PV division has about 750 dealerships and the company plans to double it by 2020. “One thing that worries me is the dealer viability. We wanted them to come to a habit of selling without discount and today our products are one of the least discounted. I reduced my per vehicle discount by 43 per cent over the past three years. Discounting is not a guarantee of sales. The good thing is service load at dealer workshops has started growing at double digits after a long time,” Pareek said.