Tata Motors inches closer to Hyundai for second spot in PVs

Ask anyone which is the largest passenger vehicle manufacturer in India and the unanimous answer would be Maruti. Ask them the second largest and most of them would say Hyundai, which is the right answer. But if the latest numbers are anything to go by then Hyundai has serious competition.

Tata Motors is breathing down the neck of Hyundai and threatens to overtake the latter soon. It is certainly narrowing its gap with Hyundai in India.

One of the big drivers of the growth of Tatas is that its sale of passenger vehicles has been largely supported by strong demand for its range of SUVs. In addition, while Maruti Suzuki and Hyundai were struggling to manage timely supply of microchips, Tata Motors was much better off.

With improved sourcing of semiconductors, Tata Motors managed to gain a rapid lead at a time when Hyundai had to shut its factories amidst the semiconductor shortage.

For the month of May 2022, Tata Motors reported its highest monthly sales (here we refer to wholesales) at 43,341 units. In short, for the month, Tata Motors ended up overtaking Hyundai Motor India which sold just about 42,293 units.

This is the second time in the last 6 months that Tata Motors has overtaken its South Korean competitor in the passenger car industry. It remains to be seen, how they compete once the chip shortages are addressed.

However, the bigger challenge for Tata Motors will be to maintain the lead, not just create the lead. After all, a few swallows do not make a summer. The leading brands of Hyundai like Creta and Venue are extremely popular in India and it is expected to recoup lost production in June and July as it expects supplies of semiconductors to improve. It remains to be seen how Tata Motors still competes post July this year.

A better gauge will be cumulative sales in the year 2022 so far. For instance, if you look at the first five months of 2022 between January and May, then total sales of Tata Motors in the PV segment is just about 11,000 units short of Hyundai Motor.

To be precise, in 2022, while Hyundai Motors sold 218,966 units of passenger vehicles, Tata Motors was not far behind having sold 207,979 units. Even on cumulative basis, the gap is not too big.
 

The head of the PV segment at Tata Motors believes that several factors have contributed to the rise of Tata Motors in the domestic PV business. For example, Tata Motors was not just supported by strong demand for new range of products, but Tata Motors also gained from the innovative actions taken by the company on the supply side. Tata Motors also has a major head start in the renewable segment with its domineering Nexon.

In terms of range, Tata Motors caters to customers across petrol, diesel, CNG and EVs. If you look at the January to May period of 2022, the volumes of Tata Motors have grown up to 60% while Hyundai Motor saw up to 15% decline, as the chip shortage hit them really hard.

Of course, most sceptics still believe that Tata Motors may find it hard to sustain this kind of stupendous performance as Hyundai also plays catch up.

There are new models coming in the Indian market. For instance, Hyundai will be launching the facelift version of “Venue” and there will be significant product action from Maruti Suzuki also in the next few quarters.

The target will be take market share from Tata core model, Nexon. This aggression from Maruti Suzuki and Hyundai can prove to be a major headwind for Tata Motors in the coming months.