Tata Motors is leaving no stone unturned to boost its passenger vehicle sales. Earlier this year, it simultaneously launched 8 new upgraded vehicles across its range, it revamped customer service experience with redesigned showrooms, launched new advertising and marketing campaigns for several of its products. But despite all that demand remains slow and customers remain unimpressed by its offerings.
To be fair, passenger car sales across the sector in India have taken a hit for more than a year now as customers postponed purchases due to high fuel prices and expensive loans.
But Tata Motors has been among the worst hit. Its passenger vehicle sales in August, for instance, came in at just 11,564 units, down 48 percent year-on-year. It only managed to sell 8,761 passenger cars. including the Nano, Indica, Vista and Manza, and 2,803 utility vehicles, which include the Sumo, Safari, Aria and Venture range.
So far this year (April-August), Tata Motors’ sales also almost halved to 56,896 units.
The company is now offering huge discounts across its range to boost sales in the festive season.
In the SUV space, Sumo Gold is now available at benefits up to Rs 35,000, and Safari Storme (launched only last year) is available with discounts up to Rs 58,000.
The Vista hatchback and its cheapest car Nano are available with benefits up to Rs 61,000 and Rs 57,000, respectively. On the Manza, there are discounts as much as Rs 1.03 lakh.
On top of that, one can scratch and win cash back up to Rs 2 lakh on purchase of any Tata car.
Despite these offers, there is no certainty that passengers will cue up at its showrooms to avail these offers, given that such discounts and benefits have been offered by Tata Motors and other car makers almost on a routine basis now, yet the auto sales have remained in the slow lane.
A key reason analysts point out for Tata Motors’ struggles is that it has not launched completely new model for 2-3 years now. It has only continued to refresh its aging lineup. This has led to the company loosing market share to multi-national rivals like Toyota and Honda, which have launched several new models during the same time (Etios, Liva, Brio, Amaze etc).
According to a dealer survey conducted by IIFL (India Private Clients), footfalls have declined 5-10 percent year-on-year for most dealers, but Tata Motors has suffered the most.
“Showroom footfalls have declined to 20 percent for majority of dealers with the recent trend stagnating or falling. Inventory holding days are around 4‐5 weeks and dealer profitability down to more than 10 percent for dealers,” the brokerage said.
The discounting is seen because most of its vehicles are “old horses with a mere facelift,” which has adversely impacted its appeal among customers, it added.
Another brokerage too pointed out that discounts at Tata Motors remain at elevated levels as it continues to struggle given its weak brand perception, no new launches and higher competitive intensity.
Tata Motors is working on new products, but a launch is only expected in FY2015. Till then it has to depend on its its existing products and refreshes to generate what ever sales it can. WIth a good monsoon this year and the festive season around the corner, it will be hoping that the overall auto industry recovers a little and in turn also boosts Tata Motors’ sales.
Despite, the weakness here in India, sales of its luxury Jaguar and Land Rover vehicles remain strong globally, and given that the British unit is generating a majority of Tata Motors’ profits, don’t think slow sales of its passenger vehicles in the domestic market will give sleepless nights to company executives at Bombay House.
However, its market share is down to single digits now and competitors are lining up new products. Maruti Suzuki recently launched the Stingray, Ford introduced the EcoSport, Nissan will launch the Duster clone Terrano SUV and then there are other hatchbacks like Volkswagen Up and Skoda Citigo, which will also enter Indian market in the future. So Tata Motors must continue to step up on its investments and new product development in India, if it wants to regain its strengths in the PV business in India.