BackTata Motors’ share of M&HCV mkt hits 10-year low in Q1
Tata Motors' market share for medium and heavy commercial vehicles in India dropped to a 10-year low in Q1 FY24, according to data from SIAM. The company's market share fell to 44%, down 560 basis points from the previous year. While bus volumes rose 42%, sales of goods vehicles fell 1.5%. The preference for higher tonnage commercial vehicles has impacted Tata Motors, a key player in the light and small commercial vehicle categories. In contrast, Volvo Eicher Commercial Vehicles and Ashok Leyland saw gains in market share.
PremiumNew Delhi: India’s largest commercial vehicle manufacturer Tata Motors Ltd saw its market share for medium and heavy commercial vehicles drop to a decadal low in the first quarter of FY24, data released by Society of Indian Automobile Manufacturers (SIAM) showed.
In the overall M&HCV segment, the company’s market share dropped to 44%, down 560 basis points over the year ago. While M&HCV sales witnessed modest growth of 2.9% during the quarter, it was primarily driven by a 42% rise in bus volumes, totalling 10,939 units, according to SIAM data.
However, the goods vehicle segment witnessed a 1.5% fall in sales to 66,835 units, compared to 67,887 units in the year-ago period.
“In June 2023, domestic commercial vehicles industry reported flattish retail sale. Mixed dynamics is observed across sub-segments. While medium and heavy segments reported 5% year-on-year growth (retail) supported by replacement demand and mining- and infra-led demand, the lighter commercial vehicle volumes contracted year-on-year due to a high base, and a slowdown in e-commerce sector. Nevertheless, despite the slow Q1, ICRA expects subsequent recovery supported by steady freight availability and government’s infrastructure spending," Sruthi Thomas, assistant vice president and sector head, corporate ratings, ICRA Ltd, told Mint.
According to Elara Capital preference for higher tonnage CVs is resulting in a significant increase in vehicle tonnage or capacity sold, as compared to the actual sales of truck units. This trend has had a negative impact on Tata Motors, which is a key player in the light and small commercial vehicle categories.
“M&HCV goods tonnage wise sales is estimated to have grown 8% year-on-year (35% lower sequentially): Tonnage sales growth has been higher than volume growth on yearly basis but underperformed on a quarterly basis.The difference in volume and tonnage growth for Tata Motors was the highest in trucks (-10% volume vs 2% tonnage growth), followed by Volvo Eicher Commercial Vehicles (20% volume growth vs 26% tonnage growth) and Ashok Leyland (0.3% volume growth vs 5% tonnage growth). M&HCV haulage and tipper sales fell 11%/ and 7%, respectively, while the tractor-trailer segment grew 53% in the first quarter of FY23", Elara said in a note.
Sales of higher tonnage sub-segment of commercial vehicles outperformed lower-tonnage segment data showed.
In the M&HCV segment, the 26.4 tonnes-plus tractors and trailers category witnessed 53% growth in volumes in Q1FY24 over a yea ago, followed by a 51.4% increase for 16.2-25 tonne trucks. Sales in all other low-tonnage sub-segments shrank during Q1FY24.
Market-share loss for Tata Motors follows its decision to reduce discount. “Discount on CV reduced in recent months, with original equipment manufacturers moving towards a demand-based pull strategy rather than discount-led sales," ICRA said.
In Q1, Volvo Eicher Commercial Vehicles gained share of the M&HCV market by 320 basis points to 19.4% compared to 16.2% in Q1. In the buses segment, Ashok Leyland led market share gains, up by 750 bps.
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