Why Tata Motors, not market leader Maruti, is beating the auto sector slump

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For some time, the Indian automotive sector seems to be sucked into a downward spiral that started with the relentless economic downturn. The journey which has been exacerbated by the Covid-19 pandemic, with automakers continuing to falter under the pressure of chip shortages and rising input costs, which has had a significant impact on production and sales in the country.

However, the declining numbers posted by top players like Maruti Suzuki and Hyundai Motor are not limited to the continued shortage of chips. This can be corroborated by a quick look at the numbers from their counterpart Tata Motors in the recent past.

It should be noted that Tata Motors’ growth rate has gradually increased over the past three to four months, with sales in April 2022 jumping by more than two-thirds compared to the corresponding period last year.

The automaker posted a 74% year-on-year sales increase after selling 72,468 units in April 2022, compared to 41,729 units in the same month last year. The growth comes at a time when rivals Hyundai India and Maruti Suzuki have faced steady decline.

Tata’s time to shine

One of the main reasons for Tata’s accelerating growth could be its shield against the declining passenger car sales growth rate reported in India. In March 2022, passenger vehicle sales fell 4%, according to the Society of Indian Automobile Manufacturers.

The small car segment, one of the biggest cash cows for automakers in India and a segment that once accounted for a large share of passenger vehicle sales, appears to have been hit the hardest. Tata Motors, however, has managed to thrive because its growth comes mainly from its SUV section with cars like Nexon and Punch leading the way.

This is also where Tata beats counterparts like Maruti Suzuki. Speaking to a publication recently, Maruti Suzuki Chairman RC Bhargava said: “What has happened is that small cars used to be bread and butter (but) I’m afraid, the butter is gone, now it’s just bread. There’s no more butter in the small car market,” speaking cautiously about the likelihood of it reversing significantly in the near term.

In April 2022, its year-on-year sales decreased by 10.22% to 1,21,995 units from 1,35,879 units last April. The company also saw a month-over-month sales decline of 8.86%. Its sedans like Alto and S-Presso saw a drastic drop in sales.

The automaker sold 17,134 cars in the mini segment in April 2022 compared to 25,041 units in the same month last year. The brand’s compact-segment cars, including Baleno, Celerio, Dzire, Ignis, Swift, Tour S and WagonR, also saw a massive drop in sales, with the company selling 59,184 compact cars in April 2022 compared to 72,318 cars in April. same month last year.

Accelerating other segments only helped Tata boost its numbers when others seemed to struggle with the small car segment stuck in a rut. The share of SUVs in passenger vehicle sales in India, for example, has more than doubled in the past five years to reach 38% in 2021, according to data from Jato Dynamics.

In April 2022, Tata Motors doubled its sales with its new SUV range. It recorded massive annual growth of 66% after selling 41,587 passenger cars in April 2022 compared to 25,095 units a year ago.

As for Hyundai, sales fell 10% in April 2022 after selling 44,001 cars in April 2022 compared to 49,002 cars a year ago. Like Tata, SUVs like Venue and Creta are Hyundai’s bestsellers. In March, with the exception of the Santro hatchback, sales fell across the company’s product line.

Unlike Maruti and Hyundai, Tata posted rising numbers month after month in 2022. In January, it recorded an impressive growth of 51.1% which saw a slight decline in February and March with growth rates of 46 .9% and 42.6%, respectively. . Maruti and Hyundai saw a steady decline in sales over the same months, with the sales decline amounting to 7%, 7.5% and 8.4%, and 15.4%, 14.6% and 15, 2%, respectively.

While Tata is focusing on segments where it can build its stronghold, it is also venturing into newer segments like the electric vehicle segment where it sold 2,322 cars in April 2022.

Restricted respite

Maruti Suzuki, the current market leader, cut production last year as the chip crisis hurt component availability. In September, he saw his highest production drop to 60%.

In January this year, the automotive industry recorded a 2.8% drop in sales with 2,94,768 units sold, compared to 3,03,398 in the same month last year. February ended with a marginal decline of 1.9% with 3,02,756 units sold against 3,08,593 units in the same month last year.

As the chip shortage continues to play spoilsport, there was also a welcome positive 2.7% month-over-month growth in overall sales. With the easing of restrictions, automakers are hoping for better sales this year.

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