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Informist, Friday, Nov. 8, 2024

By Darshan Nakhwa and Ketan Barot

MUMBAI – Tata Motors Ltd.'s passenger vehicle inventory has come down to normal levels in October on account of strong demand during the festival season, the company's management said during a media conference call on Friday. The company saw a reduction of 25,000 passenger vehicles in October on the dealer side and as a result, the dealers now have 33 days of stock. The automobile industry considers 30 days of passenger vehicle inventory, with some excess of about a week, as normal inventory level with dealers.  

Passenger vehicle industry's inventory with dealers had reached a historically high level of 80–85 days in September, due to weak demand during Ganesh Chaturthi and Onam. This weakness in demand was further exacerbated by the Shraddh period. "What happened this year is a bit atypical and the industry has aggressively corrected it across the board, and we are back to normal when it comes to inventory," Tata Motors Chief Financial Officer P.B. Balaji said.

"This inventory situation was needed for the festive season build up, and we do not intend to build back inventory and if at all we do, it will only be related to seasonality that we need to provide for," Balaji said. "For example, the month of December is a strong month so we will have to build some inventory in November to sell it there."

In Jul-Sept, Tata Motors passenger vehicle sales volumes came in at 130,753 units, down 6% on year on account of slow consumer demand and seasonal factors. The automaker now expects its passenger vehicle volumes to pick up from Oct-Dec. "November is going to be a pivotal month because that is typically when the clarity emerges in terms of how much of demand got pulled forward from the festive season. If it is able to sustain itself, then I think we should be saying that, yeah, I think the worst is behind us," said Balaji. In October, the Tata Group company sold a total of 48,423 passenger vehicles, against 48,637 units in the year-ago period. 

In Jul-Sept, Tata Motors sold 15,642 electric passenger vehicles, registering a decline of 16% on year. Responding to a question on the introduction of a battery-as-a-service option to drive its electric vehicles sales, Balaji said, "We have done the mathematics, we have seen the process, but we still remain unconvinced, particularly in passenger vehicles. Whatever we are seeing of the data that is there, we believe most of the customers are still buying the car, not necessarily using the service offering that is out there." Currently, MG Motor offers its Windsor model with a battery-as-a-service option in India.

On the commercial vehicles front, Tata Motors expects demand to pick up gradually in Oct-Dec, on the back of the easing monsoon, increased infrastructure spending, and the arrival of the festive season boosting consumption. Currently, there is nothing on the macroeconomic side that is creating any concern for commercial vehicles, Balaji said. In Jul-Sept, Tata Motors sold 79,931 commercial vehicles in India, down 19% on year on account of a slowdown in infrastructure project execution, reduction in mining activity and an overall drop in fleet utilisation due to heavy rains. It exported 4,350 units, 11.1% lower than the year-ago period.

On Jaguar Land Rover sales, the company expects both production and wholesale volumes to pick up strongly in Oct-Mar on the normalisation of aluminium supply, and diligent management of costs. "On the JLR side, I think from a demand perspective, the market that we will watch like a hawk is China, where we are seeing stress in the market... The compensation factor for China is the UK for us, which has had a very bad patch last year. But that's coming back strong...and the rest of the markets are normal as far as we are concerned at this point in time," Balaji said.

About the completion of the Tamil Nadu plant, Balaji said the timeline for completing the project is 2032. The company will create a flexible manufacturing capacity where both electric and internal combustion engine vehicles could be produced. In September, Tata Motors announced an investment of INR 90 billion to set up a plant in Tamil Nadu with an annual manufacturing capacity of over 250,000 units. On the production-linked incentive payments from the government, Balaji said the company expects the first funds to be released in Oct-Dec.

Tata Motors reported a fall in its core revenues for the first time in 10 quarters during Jul-Sept. The company's consolidated net revenue from operations fell 3.7% from a year ago to nearly INR 1.01 trillion. It also reported a fall of over 11% in consolidated net profit to INR 33.43 billion. On Friday, the company announced its results post market hours. Its shares closed 1.7% lower at INR 805.45 on the National Stock Exchange.  End

Edited by Akul Nishant Akhoury

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