Tata Motors drives past Hyundai to grab second-largest carmaker tag

Powered by strong demand for the latest range of sport utility vehicles (SUVs), Tata Motors has zipped past Hyundai Motor India (HMIL) to become the second-largest passenger car seller in the domestic market, behind Maruti Suzuki India (MSIL).

Tata Motors shipped 35,461 units of passenger vehicles (PVs) to its dealers in December 2021, against 32,312 units despatched by HMIL in the last months. While Tata Motors' shipment in the domestic market was up 50.5 per cent year-on-year (YoY), from 23,564 units in December 2020, HMIL's sales in the domestic market were down 31.8 per cent YoY, from 47,400 units a year ago.

This is first time since its entry into the PV market in late 1990s that Tata Motors has become the second-largest PV seller in the country, behind industry leader MSIL, on the basis of monthly sales. The company was the third-biggest carmaker for nearly a decade in late 1990s and early 2000s, behind MSIL and HMIL, before it ceded market share to rivals after the commercial failure of its micro car - the Nano.

HMIL, however, remains the No. 2 PV seller on a year-to-date basis. It shipped a total of 500,000 units of passenger cars in 2021, against 332,000 units shipped by Tata Motors during the period.

The Indian subsidiary of the Korean carmaker is also ahead of Tata Motors in the overall sales that includes exports. HMIL shipped a total of 48,933 units of PVs, including exports (16,621 units), in December 2021 — nearly 38.6 per cent higher than Tata Motors' overall sales during the months. The recent surge in Tata Motors' sales volume is attributed to good customer response of its new launches in the fast-growing SUV segment. 

According to analyst estimates, nearly a quarter of Tata Motors' PV sales in December 2021 came from its two recent launches — the Punch and the Safari. The company also gained from a further rise in the popularity of its bestselling SUV- the Nexon —  and strong offtake of its electric vehicle. "Tata Motors' PV business has been in revival mode for over a year now, thanks to strong customer response to its latest range of SUVs. This has enabled the company to regain most of the market share it had lost to rivals in the past decade or so," said Shailendra Kumar, chief investment officer, Narnolia Securities.

Tata Motors posted its highest-ever monthly sales in December 2021, while its total shipments in October-December 2021 were its best quarterly sales since its inception. In contrast, HMIL sales in December 2021 were the lowest since May last year.

Analysts are, however, still undecided about the long-term trajectory of Tata Motors' sales volume in the domestic market. “It will be too early to extrapolate Tata Motors' recent success over the long term, given a lack of structural growth in the overall PV market in the country. Besides, not all carmakers have been affected uniformly from the global shortage of chips and electronic components,” said Kumar.

However, despite all these caveats, the recent sales performance of Tata Motors' PV division is an encouraging sign for the company and its shareholders, given that the division has been a cash guzzler for the better part of the last two decades.