Tata Motors stocks drop 4% on Moody's Report

The agency warned lower market share in passenger, commercial vehicle segment was a 'credit negative'

The stock of Tata Motors, India's biggest vehicle maker, 4% during intraday trading following a report by rating agency Moody's.

The agency warned that the lower market share in the passenger and commercial vehicle segment was a 'credit negative'.

The stock closed at Rs 269.20 on the Bombay Stock Exchange, down 2.25% as against Rs 275.40 previous closing.

Tata Motors sales in the passenger vehicle segment dropped to 15% to 3,14,464 units last year as against the previous year. Sales in the commercial vehicle segment was also down by 6 per cent to 4,44,791 units.

George Teng, associate analyst at Moody's, said, "Since the financial year ended 31 March 2012, Tata’s passenger vehicles market share has decreased to 11.8 percent from 14.2%. Even Tata’s dominant market position in commercial vehicles saw a decline to 56.1% from 58.5% in 2012. The lower market share is credit negative for Tata".

Tata Motors lost market share to Mahindra & Mahindra and later to Toyota Kirloskar in the passenger vehicle segment. Commercial Vehicle segment has also been under pressure from new players like Daimler India Commercial Vehicles.

Tata needs to significantly invest in product development in order to recapture market share in PVs, said Moody's.