Shailesh Chandra knows the importance of staying afloat even when the chips are down. He has seen that play out very well at Tata Motors where he has been a lifelong veteran and serves as the president of the passenger vehicle business.
Over the past decade, the Rs 1.05 lakh crore automaker has seen its fortunes tumble in the Indian market, even prompting questions about its relevance in the country’s $104 billion automobile industry, before it began staging a whirlwind comeback.
From a paltry market share of 4.6 percent in 2016, and 4.8 percent in 2020, Tata Motors is now India’s third-largest carmaker, boasting a market share of well over 9 percent in the world’s fourth-largest automobile market. In FY21, the company sold 222,025 units of passenger vehicles, a 69 percent growth in comparison to the year-ago period. In contrast, the country’s passenger vehicle sales in the fiscal fell by 6.2 percent. This April, the company accounted for 9.16 percent of the domestic market, up from 8.77 percent in the previous month, according to the Federation of Automobile Dealers Association.
The phenomenal turnaround also comes at a time when the country’s automobile industry has been stuck in a quagmire for the past few years, with sales dwindling due to a slowing economy, transition into eco-friendly engines, and the Covid-19 crisis. Incidentally, the reversal in fortunes also came after a decade of turbulence when Tata Motors, which made iconic Indian vehicles such as Tata Indica, Tata Sumo, and Tata Safari in the early parts of the millennium, was left on the fringes in the highly competitive Indian car market. With dwindling sales, mostly catering only to the fleet taxi market, the carmaker had fallen out of the radar with personal buyers.
A slew of second-generation vehicles that replaced the company’s much successful first-generation models in the late 1990s and early 2000s, such as Indica, Safari, and Sumo had failed to entice buyers and replicate its initial success, forcing the automaker to go back to the drawing board and come up with a new strategy to revive its struggling passenger vehicle business. A decade ago, Tata Motors held more than 13 percent in the domestic market, which it kept losing steadily to domestic and foreign carmakers.
And through it all, Chandra knew the key was to see through the tough times with his head down and focus on the final outcome. “The commitment of the leadership and the board to the passenger vehicle business was never in question, and it was unfortunate that the second generation (of vehicles) did not work,” says Chandra. “We knew if we hit the sweet spots of the market, it will work. There was a phase we had to go through, and it was a time we had to make sure that we’re never forgotten in the market.”
In the past year, perhaps, in a strong show of confidence among investors, Tata Motors’ share price has more than tripled, with a market capitalisation of over Rs 1.05 lakh crore. In May, rating agency Moody’s upgraded the outlook from “negative” to “stable” largely due to a continued recovery in the company’s consolidated revenue and profitability, in addition to stronger credit metrics at the company.
“The rating affirmation and change in outlook to stable reflect the continued recovery in TML’s (Tata Motors Limited) consolidated revenue and profitability from the trough during the pandemic in the first quarter of the fiscal year ending March 2021,” Kaustubh Chaubal, vice president and senior credit officer at Moody’s said in a report. “We expect the recovery to sustain over the upcoming 12 to 18 months, strengthening TML’s credit metrics.”
What worked now
Much of the turnaround over the past few years is largely on the back of the increased sale of four vehicles that have now become the mainstay of the carmaker. Together, they form part of what Tata Motors call the “New Forever” range of vehicles, which boast high safety standards, better engine performance, and driving pleasure, aesthetic design, and rich features, in comparison to some of their previous models.
The Nexon, which launched in 2017, the Harrier in 2019, and the Altroz in January 2020, contributed to as much as 60 percent of the sales in the last fiscal. Of that, Altroz and Harrier were manufactured on the Alfa and Omega platforms, respectively. The two platforms, the first of which was introduced in 2018 on the Harrier and later the Altroz, marked a shift in the company’s practice of developing specific platforms for every model. There is also the company’s hatchback, Tiago, which was initially christened Zica, that has been holding steady in terms of sales, and clocking over 6,000 units a month since the past few years.