Tata Motors volumes show it shined brighter than peers in January

The new year begun well for Tata Motors Ltd. Despite lingering supply chain inefficiencies, the company’s domestic passenger vehicle (PV) volumes rose as much as 51% year-on-year in January. On the other hand, Maruti Suzuki (India) Ltd’s PV volumes fell 7%. Although, with improving operating environment both companies reported a sequential rise in volumes.

In general, the PV segment continues to benefit from increased focus on personal mobility. As per analysts at Jefferies India, “We estimate that PV industry wholesales declined just about 3% year-on-year in January (up about 15% month-on-month), versus 17% fall in Dec-Q."

Note that the market share of electric vehicle (EV) sales is expected to gradually increase, going ahead. Tata Motors expects its EV mix to reach about 20% from 6-8% now. In this regard, one of the key announcements in the Union Budget was the battery swapping policy. This will accelerate the process of migration to EVs.

As such, investors could closely track the EV announcements by companies given the increased support from the government. Investors should also note that enthusiasm about the EV segment drove Tata Motor’s share prices by around 58% in the past one year.

Overall, for the auto sector, better export demand continues to offset subdued domestic demand to an extent. Rohan Kanwar Gupta, vice president & sector head – corporate ratings, ICRA Ltd, said, “In contrast to the domestic sales environment, steady demand from African and LATAM regions continued to be the silver lining for the industry, with exports clocking steady volumes of over 3.5 lakh units in January 2022 viz. 3% sequential growth.”

In the commercial vehicle (CV) segment, Tata Motors and Ashok Leyland saw growth of 3% in the domestic sales. But hard times continue for tractor and two-wheeler sales. Jefferies analysts estimate that tractor industry wholesales fell a sharp 38% y-o-y in January.

Meanwhile, weak rural sentiment continued to impact two-wheeler sales in January 2022. Sporadic lockdowns due to the third wave added to the woes. In January, Bajaj Auto Ltd saw its two-wheeler sales decline by 16% y-o-y while TVS Motor Co. Ltd’s two-wheeler sales fell by 14% y-o-y. In its press statement, TVS Motor said, “The production and sales of premium two-wheelers were severely affected due to the shortage of semiconductors. We are cautiously optimistic that this will improve in the coming months.”

However, sequentially, Bajaj Auto’s volumes grew 1% while TVS Motor’s volumes rose 8%. Hero MotoCorp continues to lag as it witnessed a steeper fall in volumes of 22% y-o-y and 4% sequentially.