Why Tata Motors, Not Market Leader Maruti, Is Beating Slump In Auto Sector

For a while now, India’s automobile sector seems to be getting sucked into a downward spiral which started with the unceasing economic slowdown. The trip that was exacerbated by the Covid-19 pandemic with automakers continuing to reel under the pressure of the chip shortage and rising input cost which has significantly impacted production and sales in the country. 

However, there is more to the declining numbers posted by leading players like Maruti Suzuki and Hyundai Motor than just the ongoing chip shortage. This can be corroborated by a quick look at their counterpart Tata Motors' numbers in the recent past. 

What is worth noting is that the growth rate of Tata Motors has been gradually increasing for the past three to four months with sales in April 2022 jumping by over two-thirds as compared to the corresponding period last year. 

The automaker posted a 74 per cent year-on-year surge in sales after selling 72,468 units in April 2022 as compared to 41,729 units in the same month last year. This growth comes at a time when rivals Hyundai India and Maruti Suzuki faced a consistent dip.

Tata’s Time To Shine 

One main reason behind Tata’s growth gaining momentum could be its shield against the shrinking growth rate of passenger cars’ sales being reported in India. In March 2022, the passenger vehicle sales dipped by 4 per cent, 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 which used to make up a massive chunk of the passenger vehicle sales, seems to have taken the hardest hit. Tata Motors, however, has managed to thrive because its growth majorly comes from its SUV section with cars like Nexon and Punch leading the way. 

This is also where Tata beats counterparts like Maruti Suzuki. Speaking with a publication recently, Maruti Suzuki chairman RC Bhargava had said, "What has happened is that the small cars used to be the bread and butter (but) I am afraid, the butter has gone away, now it is only bread. There is no butter left in the small car market anymore," talking cautiously about the likelihood of it reversing substantially in the near term. 

In April 2022, its year-on-year sales declined 10.22 per cent to 1,21,995 units as against 1,35,879 units last April. The company also recorded a month-on-month sales decline of 8.86 per cent. Its hatchbacks like Alto and S-Presso reported a drastic decline in sales. 

The automaker sold 17,134 cars in the mini segment in April 2022 as against 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 reported a massive decline in sales with the company selling 59,184 compact cars in April 2022 as against 72,318 cars in the same month last year.

The other segments picking up pace has only helped Tata propel its numbers when others seemed to be struggling with the small car segment stuck in a rut. The SUV share in India's passenger vehicles sales, for instance, has more than doubled in the last five years to 38 per cent in 2021, according to data from Jato Dynamics.

In April 2022, Tata Motors doubled its sales with its new range of SUVs. It posted a massive year-on-year growth of 66 per cent after selling 41,587 passenger cars in April 2022 as against 25,095 units a year ago.

In terms of Hyundai, the sales declined 10 per cent in April 2022 after it sold 44,001 cars in April 2022 as against 49,002 cars a year ago. Like Tata, SUVs like Venue and Creta make up Hyundai’s bestsellers. In March,  except for the Santro, a hatchback, the sales dropped across the company’s product line-up.

Unlike Maruti and Hyundai, Tata has been posting swelling numbers month after month in 2022. In January, it registered an impressive 51.1 per cent growth which saw a slight dip in February and March with growth rates at 46.9 per cent and 42.6 per cent, respectively. Maruti and Hyundai have been witnessing a consistent dip in sales over the same months with the drop in sales standing at 7 per cent, 7.5 per cent and 8.4 per cent, and 15.4 per cent, 14.6 per cent and 15.2 per cent, 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, had reduced its production last year with the chip crisis hurting the availability of components. In September, it saw its steepest output cut at 60%. 

In January this year, the auto industry saw a 2.8 per cent drop in sales with 2,94,768 units sold as compared to 3,03,398 in the same month last year. February had ended with a marginal drop of 1.9 per cent with 3,02,756 units sold as compared to 3,08,593 units in the same month last year.

While chip shortage continues to play a spoilsport, there has also been a welcoming 2.7 per cent month-on-month positive growth in overall sales. With restrictions easing, automakers are hoping for better sales this year.