Tata Motors, M&M in prime gear as MNC rivals stall

When Shailesh Chandra was appointed head of Tata Motors’ passenger automobile (PV) division two years in the past, the corporate’s place in PVs was at its worst, with market share dipping beneath 5 per cent. The final two years, although, has been a dramatic turnaround for Tata Motors, with its market share greater than doubling and two of its vehicles now that includes within the prime ten bestsellers’ checklist. Chandra can be a happy man in the present day, for below him, Tata Motors ended FY22 with a share of 12.15 per cent, the very best in a decade. The leap in Tata Motors’ market share was the steepest ever by the corporate in a single 12 months.

A 12 months after Chandra assumed cost, there was a management change at one other Indian automotive model, Mahindra & Mahindra (M&M). Anish Shah took over as MD and CEO of M&M at first of FY22. Beneath Shah, M&M’s market share hit a three-year excessive at 7.35 per cent, in response to information shared by the Society of Indian Car Producers (SIAM).

Sluggish gear

The surge in share of the Indian manufacturers has meant a fall in share of competitors. Throughout FY22, the market share of automotive market chief Maruti Suzuki noticed its biggest-ever single 12 months fall, closing at 43.38 per cent, a decline of 4.33 proportion factors. The nation’s second largest carmaker, Hyundai’s FY22 share was the worst since FY14 at 15.68 per cent.

One in each 5 passenger automobiles bought in India final 12 months was made by an Indian firm. Vehicles and utility automobiles bought by Tata Motors and M&M managed practically 20 per cent of the nation’s PV market, making it the very best in 9 years. Tata Motors and M&M are the one two massive quantity Indian automotive firms within the nation from a complete of 15 firms, who management little over 3.06 million PVs as of FY22, making India one of many prime 5 PV markets on the planet.

India’s prime 4 carmakers — Maruti Suzuki, Hyundai, Tata Motors and M&M — management 80 % of the home market, whereas the steadiness share is break up between 13 firms, together with world heavyweights like Volkswagen and Toyota. Shailesh Chandra, Managing Director, Tata Motors Passenger Automobile and Tata Passenger Electrical Mobility, mentioned the corporate’s FY22 gross sales would have been even greater if there have been ample provides of semiconductors.

“Right this moment volumes are restricted not resulting from capability however due to semiconductor scarcity. Regardless of ramping up Nexon’s manufacturing to 13,000 a month (from 5,000 a month) there may be nonetheless a ready interval of three to 4 months on it. We will enhance our capability by one other 20-25 per cent by way of debottlenecking,” Chandra added. Launched in 2017, the Nexon has been a sleeper hit for Tata Motors, turning into the nation’s highest-selling SUV in March.

Not simply the Nexon, however virtually all Tata Motors’ fashions are unavailable for spot supply. The Punch, Safari, Altroz and Tiago, along with the Nexon EV and Tigor EV, are making consumers wait for 2 to 6 months. The ready is regardless of the corporate greater than doubling its month-to-month manufacturing during the last two years to over 40,000 items, with the provision chain concern plaguing the business. M&M’s development as compared was decrease, nevertheless it managed to make competitors sit up and take discover of its launches. Regardless of its premium price ticket, the XUV700 grew to become a runaway success similar to the corporate’s earlier launch, Thar. Whereas the XUV700 obtained 50,000 bookings inside two days of launch, the Thar continues to be the most well-liked product in M&M’s portfolio with the ready interval stretching to a 12 months. The Anand Mahindra-led firm was one of many earliest to have been hit by chip scarcity, resulting in the corporate endeavor unscheduled manufacturing holidays, though bookings continued to pile up with sellers. Maruti Suzuki India (MSIL), wherein Japan’s Suzuki Motor Firm holds 56 per cent stake, says its market share suffered resulting from chip scarcity and never due to competitors. September and October had been the worst months for the corporate as its vegetation operated at half their regular month-to-month manufacturing ranges.

Maruti’s defence

Shashank Srivastava, Senior Government Director, Advertising and marketing and Gross sales, MSIL mentioned, “It’s not true that elevated competitors has led to market share loss. Final 12 months, our non-SUV market share elevated to the highest-ever. From 58 per cent 4 years in the past , our share within the non-SUV section elevated to 67 per cent, the place there may be presence of competitors as effectively.”

With simply two SUVs (S-Presso and Brezza), MSIL’s providing is effectively in need of competitors, which can be the rationale behind its market share slide. The corporate claims it has pending orders of three,25,000, which isn’t solely the very best in its close to 40-year historical past, however covers over two months of home gross sales. Neither the business nor Maruti Suzuki has any clear visibility with reference to normalisation of semiconductor provides. “Clearly the issue lies with the general provide chain and secondly the SUV section. In SUVs, our market share is 11-12 per cent and that brings our general market share down,” Srivastava added. Regardless of a number of product launches, Korean automotive model Hyundai’s share in Indian PV section has remained beneath 16 per cent during the last 11 years. Trade sources level out that India is simply one of many a number of large markets the place Hyundai has a presence and a comparability between Indian automotive manufacturers and Hyundai might not be completely applicable.

Hyundai’s rebuttal

A Hyundai spokesperson additionally factors to semi-conductor half provide concern. “We’re doing our greatest to handle optimum ranges of manufacturing. Previous to the semi-conductor disaster, we had registered the highest-ever market share of 17.4 per cent since inception within the CY 20. At the moment, we’re holding over 1.2 lakh pending buyer bookings and we’re doing our greatest to serve our prospects on the earliest potential.

In line with Puneet Gupta, Director, S&P International , “The luggage conventional firms carry like these of Maruti Suzuki and Hyundai, is the largest bottleneck for them. These could be outdated vegetation, outdated know-how, investments, present engine vegetation and their agility to maneuver ahead. They should reframe their technique from “zero base”. One other very important facet that may have performed a job in swaying purchaser determination away from Maruti and Hyundai is automobile security. The International NCAP checklist of prime six most secure vehicles bought in India is dominated by fashions made by Tata Motors and M&M. Not one of the Maruti Suzuki and Hyundai fashions have ever come within the prime ten checklist. Saurav Kumar, Managing Director, Protiviti Member Agency for India, explains, “Security assurance has change into a prerequisite for Indian shoppers. A number of fashions of Maruti, Hyundai and Honda have scored low values of three and beneath (out of 5) within the International NCAP Crash Assessments, whereas Indian manufacturers like Tata and Mahindra have been rated 4 and above persistently, which ends up in shift of gross sales in direction of these manufacturers.”

There is no such thing as a denying that the Indian challengers are actually accelerating — can Maruti Suzuki and Hyundai get previous the luggage and rev up?

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April 24, 2022

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