‘We see a higher market share growth in big cities’4 min read . Updated: 14 Sep 2020, 11:01 PM IST
The vehicle scrappage policy, which is long overdue, would move demand too. Hopefully, the government will roll it out soon
Tata Motors sold more than 18,000 passenger vehicles in August and expects the demand momentum to sustain through the coming months on the back of an extended festive season. Speaking in an interview, Vivek Srivatsa, head, marketing, passenger vehicle business unit, Tata Motors, said the company is seeing an increase in market share in the bigger cities driven by demand for its popular models Nexon and Altroz. Edited excerpts:
How do you see demand picking up for Tata Motors passenger cars during this year’s festive season?
We have had a good run in August and it is across all products, pan-India. We have a sharper range of cars and our new products such as the BS-VI Harrier, Altroz and the updated Nexon are doing very well. We are seeing higher growth in terms of market share in the bigger cities even as good growth is also coming from the smaller cities. This could be because of two reasons—awareness around safety and design are more pronounced in larger cities; these markets also act as a lighthouse and similar demand percolates down to the smaller cities.
The festive season is considered to be a good purchase period for cars as these are high-value purchase items and also see high involvement of the family in taking that decision. So, this suits the festival purchase sentiment.
We believe this year, people are prioritizing on how they should spend their money. While it is an indisputable fact that personal transportation is safer now, probably this year, people are prioritizing buying a car over purchasing gold and property. Meanwhile, good monsoons and robust agricultural produce is driving rural demand.
The extended festive season this year augurs well for the industry.
Yes, it does. Onam was last month, it started off very well. It could be a superstition but generally it is felt that if Onam starts off well, it usually turns out to be a good year for all festivals. So, we are positive about the festive season stretching for four months with Durga Puja (October) and Diwali (November) coming up.
Is it the pent-up demand or fresh demand that is driving car sales in the market? How would you differentiate between the two?
While I would say that it’s a mix of both in the market currently, I think it is very difficult to differentiate between the two. On an average, people take around six months to actually make up their minds as online research starts much earlier. March onwards, there was pent-up demand in the market. Consumers who had postponed their purchases are returning to the market now.
Do you see more demand for entry-level cars currently?
The demand is not skewed to the traditional entry products, which are supposed to be the cars costing less than ₹4 lakh. Today, the customer has really evolved. The first-time customer also selects a product that is quite high in the price range.
So, while the Nexon SUV is seeing good traction in the market, we are seeing a large number of first-time buyers. The percentage of first-time buyers has significantly moved up in the last two months for Nexon and Altroz.
We understand that features like safety and design are now given far more weightage in the purchase decisions.
How long do you think the current demand cycle could last?
The fundamental rule of driving an economy is that initially it has to be fed and then it must become self-sustainable. The demand-driven production ramp up has resulted in many of our vendors operating at full capacity. This will ensure flow of funds across the value chain and would contribute to a sense of job security, purchasing power and improve sentiments. Also, we are fortunate that good monsoon leading to robust agricultural produce is playing a key role in building rural demand.
That said, vehicle scrappage policy, which is overdue, would move demand too. Hopefully the government will roll it out soon.
As of today, what is a bigger challenge—demand or supply?
As of today, supply is a bigger challenge, definitely for Tata Motors. Our production team is doing great work in ramping up output over the last two months. While we will be producing many more cars, we don’t have enough coverage (inventory) at our dealerships, so stock is moving quickly. Hopefully, this should sustain, as this is the ideal way to manage the business. We would like to ensure faster deliveries to our customers.
How is Tata Motors preparing ground for the launch of its anticipated compact SUV HBX in Q4FY21?
While we won’t be able to share the time of launch of this model, we know that it would be a unique car in its segment. As the concept showed (Delhi Auto Expo), it would be a very capable SUV and would provide all the safety features of a Tata car. We are already seeing a lot of enquiries and demand around this product.