Tata Motors troubled with the decreasing Market Share

India’s largest commercial vehicle manufacturer Tata Motors is feeling uneasy in terms of falling market share. The declining medium and heavy duty truck and bus sales have triggered a grave concern for the automaker so much so that the board members are seriously contemplating on some radical steps.

During the last couple of years, Tata Motors has been losing ground to immediate competitor Ashok Leyland in the heavy duty trucks and buses category. As per Society of Indian Automobiles Manufacturers (SIAM), in FY17, share of Tata Motors medium and heavy duty commercial vehicles segment has dropped to whopping 49.2 percent from 51.9 percent a year ago. The major blow came from heavy duty trucks segment market share of which fell back to 53 percent in FY17 from 58 percent in FY15.

Last month, the same MHCV category saw 40 percent sales drop while the overall decline in the commercial vehicles sales was 13 percent to 23,606 units. This is based on the rough calculation by Tata Motors indicating the fall in market share, hitting revenue and profitability.

Ravindra Pisharody, ex-executive director, commercial vehicle business at Tata Motors, said “April sales were low because after the court ruling, the availability of BS-IV vehicles became an issue as the presumption was that in the first month of the year, we will also have the mix of both BS-III and BS-IV vehicles”. Adding to that, he said last year’s high base was another reason for underperformance this year. Moreover, the shortage of fuel injection pumps further dented sales in May. He also blamed November note ban as one of the external factors contributing to this decline.

The commercial vehicle business is the most bankable business of Tata Motors, generating 70 percent of its total revenue in India. Hence, the decline in the market share of medium and heavy duty vehicles is a grave concern. According to experts, in the last two years, Tata Motors has lost 2.8 percent and 5.5 percent market share respectively. This translates to 8,600 and 16,700 less units going off the shelf, entailing a loss of INR 1,100 crore and INR 2,300 crore, in that order.

Pisharody who is also a member of the board, said that they are analysing all aspects to bring back the business on track. On the flipside, he is also convinced that the implementation of GST and refurbishment of fuel injection pumps will revive the sales in coming months. This would help regain Tata Motors 5 percent market share by the end of the current fiscal. Some experts are also citing the underperformance due to poor after sales response of Tata Motors as against the rivals.

Apart from this, some also opines that the gap in the product line was also responsible for the poor performance. For instance, Ashok Leyland 3718, the 37-tonne truck was a smash hit in FY16-17, earning 3.5 percent market share alone. Tata Motors failed to address this challenge.

Pisharody said company is currently enlightening customers and organizing various service programmes besides expanding its network across the country. As with BS-IV norms, the service has to play a bigger role in gaining momentum in the market again.