Tata Motors' Passenger Vehicle (PV) business unit showcased resilience amid challenging market dynamics in Q2FY25, reporting revenues of INR 11,700 crore, a year-on-year decline of 3.9%. While the industry faced a slowdown in consumer demand, the company sustained its leadership in the domestic electric vehicle (EV) segment with an impressive 65% market share, even as the overall EV market saw a 5% decline in registrations during the quarter.
Navigating Challenges With Diverse Strategy
Shailesh Chandra, Managing Director of TMPV and TPEM, highlighted the company’s balanced approach to tackling a fluctuating market environment. Despite a moderation in revenues, Tata Motors maintained steady EBITDA margins at 6.2%, reflecting effective cost management and strategic product launches. Chandra, at the Investor presentation recently, attributed the revenue dip to the broader market slowdown and moderated stocks to control channel inventory.
However, the OEM’s strategic multi-powertrain approach across electric, CNG, and internal combustion engine (ICE) vehicles has been a strong differentiator. The recently launched Tata Curvv and Curvv.ev received positive consumer response, creating optimism for future demand. The Nexon EV and other electric variants also continued to drive interest, reinforcing Tata Motors' focus on sustainable mobility.
Market Performance, Festive Boost
Market share for Tata Motors PVs stood at 13.3% in Q2FY25, remaining stable year-on-year. Encouragingly, festive sales in October saw a recovery, with market share bouncing back to Q1 levels of 13.7% and achieving record monthly registrations of 68,500 units. Chandra emphasised that customer sentiment, while slightly moderated during the quarter, remains robust, with the company’s new petrol and CNG engine variants further enhancing its portfolio.
The company’s compliance with Corporate Average Fuel Efficiency (CAFE) standards also stood out, with a significant headroom of 25 grams per km, demonstrating the effectiveness of its multi-powertrain strategy.
EV Segment Leadership Amid Challenges
Despite the withdrawal of FAME-2 subsidies and reduced fleet segment incentives, the vehicle maker sustained a 67% market share in the personal EV segment. The company is actively driving growth in the EV ecosystem, with a focus on charging infrastructure expansion to enable mainstream adoption of EVs.
Tata Motors has also launched initiatives to enhance EV profitability, leveraging battery price reductions and new product launches. These efforts reflect the company's adaptability and commitment to sustaining its leadership in the EV market, he added.
Headwinds & Strategic Responses
The broader automotive industry experienced headwinds, with September marking a 26-month low in registrations. SUVs remained the only bright spot, recording 8% year-on-year growth, while hatchbacks and sedans saw a 20% decline. Tata Motors' Punch emerged as a top-selling model in the first half of FY25, with over 100,000 units sold. However, industry-wide challenges such as high inventory levels and increased discounting impacted profitability.
The vehicle maker mitigated these challenges through a mix of material cost reductions and strategic pricing. However, higher handling and production development costs for new product launches affected margins, with full benefits expected to materialize in subsequent quarters.
Outlook
Looking ahead to Q3FY25, the OEM anticipates strong retail sales driven by festive and year-end demand. Wholesale volumes may lag retail to manage channel inventory. The company plans to leverage new model launches and aggressive marketing campaigns to drive retail growth. Expansion of the dealership network and ecosystem initiatives for mainstreaming EVs remain key priorities.
Cost reduction efforts will be intensified to maintain profitability amid increasing competition. With a strong booking pipeline and the full impact of new product launches yet to unfold, Tata Motors is optimistic about capitalising on its strategic initiatives to navigate a challenging market environment.
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