Shailesh Chandra, Managing Director, Tata Motors Passenger Vehicles Ltd. and Tata Passenger Electric Mobility Ltd., talks about sales numbers of FY22, semi-conductors, SUV sales and expectations in the space, product pipeline, plans for electric variants and CNG variants among others during an exclusive interview with Swati Khandelwal, Zee Business. Edited Excerpts:
WATCH | Click on Zee Business Live TV Streaming Below:
Q: Congratulations! The company has posted the highest ever monthly sales of 42,293, a 43% YoY growth. What were the key factors behind this kind of performance?
A: Last year, we did the highest ever in our history of 3,70,000 units, which is a 67% growth. The main reason behind this is the popularity of our New Forever range, which is increasing. Along with this, the agility with which we managed the supply situation also had a huge contribution. Our products that are turning popular and have increased a lot is the SUV range and we have four products in the segment, namely Nexon, Punch, Harrier and Safari. Nexon was launched in 2017 and we saw a peak in it last year and sold 1.25 lakh units of the vehicle. The numbers are not out yet but there is no doubt that Nexon will turn into the number 1 SUV when the numbers will be out. Secondly, we have sold 50,000 units of Punch in just six months and it is a very successful vehicle. In the last six months, we have seen that it has been on the list of the top 10 most sold cars. So, these two products, Nexon and Punch, have been quite very strong products for us. Even Harrier and Safari were also sold around 50,000 last year. In the second half of the last financial year, we have constantly emerged as the number 1 choice in the SUVs segment. So, SUVs have had a big contribution to our growth and have 65-70% contribution to our sales.
Q: More importantly, how were you able to deliver this performance despite such an acute semi-conductor shortage? Also, do you expect that the numbers will get better from here and what is the situation of the semi-conductors?
A: If you will have a look at the second and third quarters of the last financial year then the industry was not able to make more than 7.50 lakhs per quarter but in the last quarter, although the numbers are not out yet, the industrial volume would have stayed around 9 lakh to 9.50 lakh. So, it is clear that there is an improvement in the semiconductor situation. I expect that the trend would continue even in the ongoing quarter. At the same time, we are also closely monitoring the situation in Ukraine and what impact it could have on the complete value chain. But, I expect that the situation will be quite better than the situation, we saw in the second and third quarters last year.
Q: In your sales figure, you also delivered the highest ever SUV sales of 29,559 units. With this, how much market share have you gained in this segment since last year as of the date and what kind of market share you are targeting for the SUV space?
A: I feel that we would have gained around 30% market share in this space, which stood at around 16-17% till the last financial year. So, our market share of SUVs has grown significantly this year. Normally, we used to sell around 12,000-13,000 SUVs every month, which has increased to around 30,000 last month. So, there is a significant increase in the market share and the main drivers are Nexon and Punch. We sold around 25,000 units of these two SUVs together last month. These two products will drive growth.
Q: Amid good response on SUVs, it seems that you will have a special focus on the segment. So, in terms of product pipeline what is the product pipeline plan of the company? As we have entered into FY23, so, what should be expected from Tata Motors in terms of products?
A: There has been a trend over the last many years even globally, that the popularity of SUVs is increasing. SUVs are quite comfortable in Indian road conditions. So, the customers’ trend is also towards SUVs. But there is a second big factor in which the EVs (electric vehicles) are becoming a mainstream product at a great pace and we have a lot of focus in that space as well there will be good growth in that. We will try to strengthen our product portfolio in the SUVs and EVs segments in the coming years.
Q: On the EV front, there has been a rapid acceptance of your offerings, be it Nexon EV or Tigor EV. On a YoY basis, the sales volume has soared from a mere 705 units in March 2021 to 3357 units in March 2022. What are your targets for March FY23 for EVs and what new will happen in this space?
A: Rightly said, our EV segment has grown times in FY22 as compared to FY21. We sold around 4,000 units in FY21 and around 20,000 units in FY22. But these numbers are supply numbers while demand is quite high from this. Therefore, the growth of EVs will depend on the pace we can ramp up our capacity. So, we are focusing a lot on ramping our capacity as soon as possible because we are getting strong bookings, which is more than 6,000 units/month, for these vehicles. If we will have a look at the pending bookings, if we have a look at the supply rate, then it would be at least four to four and a half times in the EV space with us. So, the demand is increasing at a great pace and even the states are coming up with very progressive policies. The demand for EVs is increasing rapidly with an increase in the positive word of mouth from the customers.
Q: Can you please provide a number from the target point of view that you may attain in FY23 in terms of sales across the country? Also, tell us about the production numbers as well as the capacity to which you can scale up?
A: The capacity has not frozen yet, but if you have a look at our supply rate then last month’s number is our peak, which is around 3,500. If you will have a look at every month then in the last 5-6 months the number stood at around 600-700 units per month, which has been ramped up to 4,500. The productions will be increased in the coming months so that we can meet the demand and this is going to be our focus. I would not like to provide the targets for the next year as it very competitive and sensitive number but you can see that we are not focusing on percentage growth in the last few years but are talking in multiples. We will try to grow in multiples in the EV space.
Q: Tata Motors has got its first tranche of investment of Rs 3,750 crore from TPG for the EV business. What’s your immediate plan of action with the money?
A: At the time of the announcement, we have said that this money will be invested in new products and we have already announced that we will bring 10 new products in the next five years. At the same time, we will also invest in several underlined technologies like power train technology and localisation. So, the fund will be used in this manner.
Q: The commodity prices are still at inflated levels. How much price has been taken to date and when the next evaluation is about to happen?
A: We have taken a price hike of around 3.50% to 4% this year of the total revenue although the commodity prices would have increased by 5.50% to 6%. So, it has not been passed on completely. Earlier, we used to talk about steel prices and precious metals. But the pressure that the auto manufacturers are facing due to semiconductors has forced us to opt for spot buy from the market, which is quite expensive. So, the cost of semiconductors has also increased a lot. Thus, if all these factors are seen in combination then the price hike is imminent, however, it has not been decided yet. We will inform about the same whenever it will happen
Q: There has been a price hike in commercial vehicles, so, is there any possibility that there can be a price hike this month itself and will its quantum will be in the range of 2-3%?
A: It is possible but I cannot confirm it, now.
Q: The company has a good focus on CNG and is also getting responses in that space. What’s your product launch pipeline for CNG particularly in FY23?
A: We are seeing a growth in CNG and in January, we launched the CNG variants of Tiago and Tigor. We have also seen good bookings for these two variants and if I have a look at the monthly supply rate then we have received three to four times more bookings for those. So, we are quite optimistic about this segment and are also working on a few other products but would be able to talk about the launches only when we will come close to them.