The sales performance of Tata Motors Ltd in December isn’t really surprising. Total sales had declined by 30% in November and things were expected to get worse, what with news of plant shutdowns at the company. The 47% drop in sales on a year-on-year basis, therefore, was more or less expected. Exports, too, have taken a bad hit, declining by about 72% across categories in December.
But what’s worrying is there are no signs of improvement. The company’s production figures for the month paint a rather bleak picture for the near future. Thus far, the pain seems to be mainly in the medium and heavy commercial vehicle (M&HCV) segment, sales of which have fallen by 65% on a year-on-year basis in the November-December period. The light commercial vehicle (LCV) and passenger car segments have done much better. Their sales have fallen by 23% and 10%, respectively, in the same period.
In terms of production, however, there has been an aggressive cut across categories. While the M&HCV segment has borne the brunt, with a 76% cut in production on a year-on-year basis in December, even the production of LCVs and cars was cut by half. Only 6,681 LCVs were produced, compared with an average of 17,000 vehicles every month in the April-October period. Similarly, car production stood at 6,284 vehicles, compared with an average of nearly 13,000 vehicles every month in the April-October period. The sharp cut in production last month suggests that the slowdown in sales will continue and may even increase in segments other than M&HCVs.
The recession in the domestic market has drastically reduced the need for new trucks. Moreover, commercial vehicle financiers are now facing delinquencies at an increasing rate and are fighting shy of giving out new loans to truck operators. This makes the outlook for new sales rather bleak.
Passenger car sales, too, have been hit by the slowdown in the economy and the job market. The cut in excise duty, announced in the beginning of December, has hardly helped Tata Motors. Domestic car sales for the company fell by 33% from November despite lower prices. Competitor Maruti Suzuki India Ltd had reported a month-on-month improvement in sales owing to the excise cut.
All told, the rough ride for Tata Motors can be expected to continue.
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