Mumbai: Tata Motors Ltd has set an aggressive passenger vehicle sales target for 2017-18, as the nation’s largest vehicle maker seeks to claw back market share amid intense competition.
The company aims to sell 250,000 units of cars and utility vehicles in the year ending 31 March, said three people who attended a meeting of dealers in Beijing last week, addressed by company managing director and chief executive Guenter Butschek. The three requested anonymity.
Tata Motors is hoping the domestic operations will be able to swing back to profitability by 2018-19, the people said. If the company is able to meet the targets, the sales would be the highest in four years. The company sold 371,350 passenger vehicle units in 2012-13.
A Tata Motors spokesperson declined to comment. “The dealer conference is an internal matter and hence we do not wish to comment,” he said. Butschek’s confidence of robust, double-digit growth, stems from the resurgence in passenger vehicle sales after the introduction of models including the Tiago hatchback, Hexa cross-over and Tigor sedan.
In the year ended 31 March, Tata Motors sold 172,504 units, up 15% from a year ago, against 149,420 units a year ago, according to the Society of Indian Automobile Manufacturers (Siam).
“The company has set a very big target for the current year and we are confident of achieving it,” said one of the people cited above. Close to 700 dealers attended the meeting, he added.
“All this while, we were struggling because of lack of good products. The recent launches have changed that,” he said, adding the company’s management shared a clear strategic plan and details on product life cycle management. “There was an assurance that Tata is coming back.”
Tata Motors is hoping that an improvement in passenger car sales will also help the firm turn around its domestic operations, which has been incurring losses. The loss at Tata Motors’ domestic business widened to Rs1,046 crore in the quarter ended December, from Rs137 crore in the year-earlier period.
In a 19 April report, Raghunandan N.L., an analyst at Quant Capital, wrote that Tata Motors expects standalone operations to break even by fiscal 2018-19. “The management expects standalone business to witness a turnaround by FY19, led by higher profits in commercial vehicles and reduction of losses in passenger vehicles. Losses in passenger vehicle division could reduce due to robust volumes (led by aggressive launches) and cost reduction efforts,” the report said.
Under Butscheck’s leadership, Tata Motors is executing a strategy to reduce vehicle platforms from the current six to two and has also signed an agreement with Volkswagen AG for a manufacturing tie-up to help the firm utilise its capacity, better.
Not every one is optimistic.
“We expect domestic operations to continue incurring losses for another two years,” said an analyst at a domestic brokerage. He declined to be identified.
The prices of the recently launched car models such as Tiago and Tigor are quite low. Therefore it’s unlikely to have a material impact on the margins, he said. He also attributed the delayed turnaround to the truck business which is expected to be “subdued for a year in the absence of any catalyst.”
Tata Motors shares closed at Rs450.80, up 1.17%. The benchmark Sensex closed at 30,133.35 points, up 0.63%.