Tata Motors' Commercial Vehicles (CV) business has faced a challenging yet resilient first half of FY25, marked by fluctuating market dynamics, evolving customer demands, and a strong push for innovation across product lines. Despite a decline in volumes, the company has demonstrated its ability to adapt, innovate, and maintain profitability, setting the stage for growth in the coming months.
Navigating Declining Volumes Amid Market Challenges
In Q2FY25, Tata Motors' domestic wholesale volumes dropped by 19.6% year-over-year, with 79,800 units sold, reflecting the impact of slowed infrastructure projects, reduced mining activity, and lower fleet utilisation due to heavy rains. Exports also declined by 11.1% year-over-year to 4,400 units. Despite these headwinds, the company achieved an EBITDA margin improvement of 40 basis points, reaching 10.8%, driven by commodity cost savings and operational efficiency.
On a half-year basis, CV revenues stood at INR 17,300 crore, down 13.9% year-over-year, with an EBITDA margin of 11.2%—an increase of 120 basis points. At the Investor presentation, Girish Wagh, Executive Director at Tata Motors, expressed optimism, noting, “We expect the gradual increase in infrastructure spending to boost consumption and improve demand as we go ahead.”
Shifting Trends, Innovations
According to him, the company's heavy commercial vehicles (HCVs) and intermediate light medium commercial vehicles outperformed the industry, with notable growth in the 19-tonne truck segment and a 3% increase in passenger carrier sales. The company leveraged digital initiatives to generate 30% more leads compared to the same period last year, with 27% of these leads translating into sales.
Wagh mentioned a clear trend emerging across sub-segments, with customers gravitating toward vehicles with higher payload capacities. In the MCVs, demand is shifting toward 19-tonne trucks, while in HCVs, 55-tonne tractor trailers are gaining traction for cargo movement. Similarly, small commercial vehicles (SCVs) are seeing increased demand for higher-payload pickups, he said.
Electric Mobility
Tata Motors is making significant strides in electric mobility, having registered 550 electric buses in Q2FY25. With over 3,300 electric buses operational and covering more than 200 million kilometers cumulatively, the company is nearing the completion of its CESL Tender deployment, with over 2,000 buses already delivered. In Jammu and Srinagar, 200 electric buses are running successfully, showcasing Tata Motors' commitment to decarbonising urban transport.
According to him, the ACE EV, a flagship product in Tata's CV e-mobility portfolio, continues to gain momentum despite the absence of FAME II subsidies. With over 6,400 units operational and covering 50 million kilometers, the ACE EV achieved 17% year-over-year growth in Q2FY25. The company has onboarded 62 anchor customers for the ACE EV, including major corporates aiming to meet decarbonisation goals and municipalities exploring sustainable urban transport solutions.
Smart City Mobility, Digital Transformation
Tata Motors’ Smart City mobility solutions has been delivering robust performance, with over 3,300 buses operational and achieving 95% uptime. In the digital space, the company’s FleetEdge platform now supports over 710,000 vehicles, offering advanced features such as machine learning-based fuel efficiency solutions, which have delivered a median improvement of 4.8%. The newly launched service, “API as a Service,” allows fleet owners to share live vehicle data with shippers, enhancing supply chain transparency.
E-Dukaan, Tata Motors’ digital storefront, has gained traction with 34,000 registered buyers and 28,000 SKUs. The FleetVerse platform for online vehicle purchases recorded over 10,000 retail transactions in Q2, half of which were unique sales.
Addressing Challenges & Looking Ahead
Small commercial vehicles remain a challenge due to lower volumes and higher stress in financing. To counter this, the CV maker has implemented a three-pronged strategy focusing on improving product value, working with financiers to offer attractive schemes, and enhancing operational rhythm through digital storefronts and service penetration.
The festive season brought positive momentum, with improved truck utilization, increased tipper demand, and a 30% month-over-month volume growth in the SCV segment. Wagh highlighted that disciplined pricing and value propositions, including advanced maintenance packages and digital tools like FleetEdge, continue to drive customer satisfaction.
Optimism With A Cautious Eye
Looking ahead, Tata Motors expects buses and vans to lead growth in H2FY25, followed by intermediate, light and medium CVs. October's improved utilisation rates signal positive trends, but the company remains vigilant about SCVs and HCVs. The ACE EV is positioned for continued success, with capacity to produce 1,000 units per month and potential scalability, he noted.
Tata Motors is poised to capitalise on shifting market dynamics and customer preferences, with an emphasis on higher-payload vehicles and sustainable mobility solutions. With a robust product pipeline, strong digital integration, and a focus on operational efficiency, the company is well-prepared to navigate the challenges of a dynamic commercial vehicle market while driving innovation and growth, Wagh added.
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