Tata Motors Foresees Flat Commercial Vehicle Sales Growth In FY17
Tata Motors hopes sales pick up in the fourth quarter of financial year 2016-17.
Tata Motors Ltd., the country’s largest commercial vehicle manufacturer, hopes to sell the same number of trucks and buses in the current financial, as last year. Ravi Pisharody, the company’s executive director in charge of commercial vehicles division, is betting on pre-buying in the last three months of the fiscal, before the new emission norms come into force from the April 1, 2017, to make up for the current shortfall in total sales.
“I think it (commercial vehicle sales) is going to be flattish,” Pisharody told BloombergQuint. “There was a risk some time around August-September. We could see a slight decline and that got reinforced during the November-December demonetisation period, but at least in our numbers we have ended December with a small growth of 1-2 percent. We want to hold on to that.”
The automaker’s commercial vehicle sales in December declined by 9 percent to just under 25,000 units compared to the same month a year ago.
Fleet operators are expected to bring forward their purchase of heavy trucks, as new emission norms–Bharat Stage IV–are set to roll out on April 1.
So pre-buying is only in M&HCV (medium and heavy commercial vehicles), because it’s high-value capital equipment and the BS-IV product will be 8-10 percent more expensive. So there is a very logical reason why transporters would want to buy between January and March.Ravi Pisharody, Tata Motors To BloombergQuint
The spurt in sales will also help Tata Motors improve its plant utilisation and Pisharody plans to take it up to 70-80 percent, eventually. The average figure in the fourth quarter of the financial year 2016-17 will be lower though, at 50-60 percent.
Lower Interest Rates Will Bolster Sales
Lending rate cuts announced by a large number of banks have come as a welcome relief for commercial vehicle manufacturers. Pisharody hopes that a relatively faster economic growth will lead to higher commercial vehicles sales.
Lower rates need not necessarily lead to an increase in small and light commercial vehicle sales though, added Pisharody, who says the down payment needed to tide over the shortfall between bank credit and the actual on-road price of the vehicle still remains quite high. He said the company was in talks with lenders to try and find a way around the “hurdle”.
Product Pipeline
Tata Motors, known for introducing multiple refreshes of existing vehicles in its large portfolio, plans to launch as many as 15 completely new products in 2017.
The commercial vehicle manufacturer introduced the first of these, a new range of pick-up trucks, Xenon Yodha, to be marketed by its new brand ambassador Akshay Kumar, a popular film actor in India.
A brand ambassador for commercial vehicles in India was an alien concept till a few years back. However, Tata Motors’ peer Ashok Leyland Ltd. was the first to break the mould by introducing Indian cricketer Mahendra Singh Dhoni as its brand ambassador.
Mahindra & Mahindra, the leader in the pick-up space, also banked on a brand ambassador, actor Manoj Bajpayee, to introduce its Jeeto range of small commercial vehicles.
According to Pisharody, commercial vehicle manufacturers are trying to capitalise on a new demographic, a buyer who is more tech savvy and consumes a greater amount of media content.
The Xenon Yodha will replace the company’s existing offering in the pick-up space, the Xenon. The flagship model in the range has been priced at Rs 6.05 lakh for the Bharat Stage III engine variant and Rs 6.19 lakh for the Bharat Stage IV variant. The outgoing Xenon was priced higher at around Rs 6.50 lakh.
Among the other vehicles to be launched will be additions to the company’s Ace, Ace Zip, and Ace Mega model ranges. The company will also introduce more variants in its Signa range of trucks, and a new Ultra truck in the 14-15 tonne segment, Pisharody said.