New Delhi: Banking on a diesel variant of its small car Nano, Tata Motors Ltd on Tuesday said that it will claw back lost market share by the end of the next fiscal year even as it expects the coming months to be challenging for the car industry.
In December, the company reported a 28% drop in sales from the year-earlier period. In the nine months to December, it sold 248,068 units, an increase of just 0.46%, according to data provided by the Society of Indian Automobile Manufacturers (Siam). In that period, India’s passenger vehicle industry grew 8.37% to 1.9 million units.
Tata Motors’ market share fell from 14.16% in March to 12.66% in December.
“We would grow faster than the industry and gain back the market share (by the end of next fiscal),” said Ranjit Yadav, president (passenger car business unit), Tata Motors, in a phone interview from Greater Noida. “This year seems to be difficult with only utility vehicles showing growth. However, Q1 and Q2 of the next fiscal will be challenging but passenger cars will start seeing growth from Q3.”
Slower economic growth and high borrowing costs have deterred potential car buyers in Asia’s third largest economy.
While Siam has not come up with a sales forecast for the next fiscal, India’s largest car maker Maruti Suzuki India Ltd has said that the domestic passenger vehicle industry’s growth rate may be restricted to single digits for the next three years.
Yadav said the growth for Tata Motors will be spurred by at least four new models, including the diesel version of the Nano which will be launched during the next fiscal.
“We are moving at a faster pace, trying to strengthen our quality and purchasing function. We want to make the right decisions and would come up with better performance,” he said.
Earlier this month, Tata Motors managing director Karl Slym said the Nano diesel is scheduled for launch by the end of this calendar year.
The launch of Nano’s diesel variant may spur Nano’s sales by volume to grow by as much as 25%, said Yaresh Kothari, a sector analyst at Angel Broking Ltd.
“From what they are currently selling in the range of 7,000-8,000 per month, it may go up to 10,000-11,000 units,” said Kothari. “Initial response will be good as people are waiting for it but it is important to see if the momentum will continue in the longer-run.”
It’s easier for a company to lose market share than to gain it, said Deepesh Rathore, managing director of research firm IHS Automotive.
“In Nano’s case, the diesel variant looked a good proposition a month back (when oil marketing companies were not allowed to revise diesel price) but now it is difficult to say what volumes will the car generate,” Rathore said. “I think Tata has bigger problems to focus on. It is good that the firm is making changes at their dealerships and in overall systems. But these steps are more like doing icing on the cake while the problem is with the cake itself.”
According to Rathore, the company needs to change its brand perception.
“None of the cars launched in recent past have done well. Aria is not selling and so is the case with Nano.”
Mint in January 2012 reported that the firm was planning to launch the diesel variant of the Nano with the world’s smallest diesel engine. The car will be powered by an 800-cc twin-cylinder turbo-charged diesel engine.
According to a person directly involved with the development of the car, the diesel variant is already in the last phase of the trial run.
“We don’t want to take any risk by hurrying up the launch. There are certain issues related to noise and vibration, which will be addressed in due course,” he said.
This person also said that pricing the car competitively is also a challenge that the company is facing.
“It cannot be launched at the price point that has been speculated (starting price Rs.2.25 lakh). One has to understand that this diesel car concept is new in the segment and to meet cost targets is a challenging task.”
Tata Motors’ Yadav is unfazed. “What I can tell you at the moment is that we are ensuring that the vehicle will delight the customers and dealers,” he said.