Tata Motors (India) Ltd.: Quarterly Sales Progress

In my earlier reports on Sales Updates of Tata Motors (India) business, I have been sharing the progress the company has been making on a Trailing-Twelve-Months basis. In this report I will be sharing the Segment-wise Quarterly Numbers of the company.

Here are the links to the earlier reports:
7th Dec'17: Tata Motors Ltd. - Gaining it's momentum back!!

6th Jan'18: Tata Motors Ltd. - December'17 Sales update.

6th Apr'18: Tata Motors (India) Sales Update: Post March'18

As we all know, the entire Automotive Industry in India suffered a setback around the end of March'17 when the SC declared that BS-III vehicles cannot be sold in the country from 1st April'2017. Not all vehicle manufacturers were ready with BS-IV compliant engines for their entire model range. The Commercial Vehicles division of Tata Motors was amongst the worst sufferers due to this event. The sales figures collapsed nearly 50% for Tata Motors CVs in April'17 and then started ramping up over the next few months. Still Tata Motors had reported a 33% drop in sales of M&HCVs during Q1-FY'18. The drop was less than 7% for LCVs, whereas the Cars & UVs segment had reported a modest growth of about 9% in Q1-FY'18.

Tata Motors had done a stellar recovery in sales from all three segments over the following 3 quarters of FY'18. With the company continuing to grow with good momentum during the initial months of FY'19, the Y-o-Y sales growth has been just spectacular. Have a look at the following table:

	Q1			Q2			Q3			Q4
	M&H CVs	LCVs	Cars & UVs	M&H CVs	LCVs	Cars & UVs	M&H CVs	LCVs	Cars & UVs	M&H CVs	LCVs	Cars & UVs
FY'2016-17	40788	50656	32285	39345	52835	42689	40995	50698	40964	54134	55578	41358
FY'2017-18	27149	47371	35171	44780	61469	47072	54980	68111	48417	63458	82121	58959
% Change Y-o-Y	-33.4	-6.5	8.9	13.8	16.3	10.3	34.1	34.3	18.2	17.2	47.8	42.6
FY'2018-19	53292	69923	53319
% Change Y-o-Y	96.3	47.6	51.6

In the M&HCVs segment, Tata Motors has posted a stupendous growth of 96% in Q1-FY'19 compared to Q1-FY'18. Part of this growth figure is due to the abnormally low figures of Q1 in last fiscal. But still the figures for Q1 of this fiscal are higher by about 30% when compared to Q1 of FY'17 too. Hence the sales of M&HCVs have been really good for Tata Motors, thanks to the new models launched by the company in the previous fiscal and the strong growth in Infrastructure sector of the country. Coming to LCVs, the segment recorded a growth of over 47%, selling almost 70,000 units during the quarter. This is inline with the strong sales recorded during the previous 3 quarters, with continued strong response to the new upgraded models launched by the company over the previous couple of quarters and strong growth in e-Commerce segment alongwith development of the hub-and-spoke model in various regions.

The Cars & UVs segment too has done extremely well, riding primarily on the success of the Tiago and the Nexon models, supported to some extent by the Tigor and the Hexa. Tata Motors has completely phased out the Nano, Indica & Indigo eCS models. Even the sales of Zest & Bolt are on the decline. The company is focusing on producing more of the new generation models and is now readying to upgrade it's Showrooms & Sales experience before the introduction of it's first model on the latest Modular platform. Just this week, Tata Motors has announced the name of the new SUV to be based on this new platform, which has been developed in association with Land Rover, as the Tata Harrier. During Q1-FY'19, Tata Motors reported a growth of over 51% in sales of Cars & UVs.

Over the next few quarters, I am expecting the growth rates for Tata Motors to taper down to around 20% levels as it will face high-base effect of strong numbers during Q2-Q4 of last fiscal. Even this growth will be considered to be healthy and will help the company improve it's profitability significantly during the current fiscal.

Tata Motors: Jaguar-Land Rover (JLR) progress for FY'2018

FY'2017 was a stupendous year for Jaguar-Land Rover (JLR), the luxury automobile brands owned by Tata Motors. JLR had managed to post strong double-digit growth in it's sales figures on the back of strong sales in US, China and other emerging markets, despite zero growth in it's primary markets of UK & Europe. It was always going to be a challenge to post healthy growth again in the following year, i.e. FY'2018. But the numbers posted by JLR are fairly encouraging. JLR witnessed over 9% decline in sales in UK & Europe during FY'2018, on the back of lower demand for Diesel vehicles and the UK-Brexit issue. The contribution of UK & Europe in JLR's total sales dropped from 44% in FY'17 to 39% in FY'18, thanks to decent growth posted in other geographies.

JLR reported nearly 20% growth in China during FY'2018 and this region has now become the largest market for the company with nearly 25% contribution to overall sales. US is now the 3rd largest market for JLR contributing about 21% to overall sales, on the back of 5% growth during FY'2018. The recently announced Jaguar I-Pace Luxury Electric Vehicle is expected to garner strong numbers from the US region. It's sales are expected to begin before the end of the current quarter. JLR posted a 3% growth in sales across other Emerging markets and it now contributes just over 15% to the company's global sales.

JLR's Trailing-Twelve-Months Sales performance

Overall for the year JLR managed to post 5.4% growth in it's Wholesales during FY'18 to cross the 633,000 units mark, compared to little over 600,000 units done in FY'17. Between the two luxury brands, Jaguar reported 1.4% decline in sales, whereas Land Rover managed to post 8.4% growth in sales. Hopefully Jaguar's decline will get reversed with the launch of the I-Pace model across different geographies. This particular model has got good reviews from various Auto experts and has also got an order for 20,000 units from Google's Autonomous Car division, Waymo, which is expected to be executed over a 2 years period. (Click here for full report).

JLR has also announced that they will be launching Electric versions of all their popular models over the next 2-3 years. Going by the reviews received by their first Electric model, it could mean exciting times ahead for JLR. The only pain point for JLR will be it's home markets of UK & Europe. Hopefully the sales decline in these markets will slow down soon and we could see reversal into positive growth during the second half of current fiscal.

For a few years till FY'2017, JLR was the main growth engine for Tata Motors, while it's India business was struggling to grow or even hold on to volumes & market shares. During FY'2018, the roles have got more balanced. JLR's growth has slowed down to mid-single digit, while Tata Motors' India business has posted strong double-digit growth in volumes, across segments. Between FY'17 and FY'18, JLR's numbers grew from 600,000 units to 633,000 units, whereas Tata Motors India business volumes jumped from 542,000 units to 639,000 units. The latter has posted a growth of almost 18% compared to just over 5% growth posted by the former. Going by the momentum generated over the last few months, Tata Motors' India business is expected to grow at 10% to 15% again in FY'2019. What this means is that, even if JLR continues to post about 5% growth in sales for FY'2019, the overall growth for Tata Motors topline will be decent, whereas the bottomline should fare better thanks to better economies of scale.

Tata Motors (India) Sales Update: Post March'18

Back in December'17, I had reported about Tata Motors gaining it's Momentum back, based on the Sales numbers till November'17. That was just the beginning of the company's Sales recovery & strengthening of market share across segments. The last 5 months have been nothing short of stellar for the company. No doubt that the entire Industry is growing at a healthy pace, but Tata Motors is growing faster than competition in most segments, which is helping it gain back the market share it had lost in the previous couple of years.

March'18 has proved to be the best month for Tata Motors in terms of Sales, both in Passenger Vehicles as well as Commercial Vehicles, in a long long time. Tata Motors (India) Wholesales stood at 69,440 units in the Domestic market, a 35% Y-o-Y growth, and 6713 units for Export, a growth of 15% Y-o-Y. For the month of March'18, the M&HCV segment reported a growth of 20%, the LCV segment posted 48% growth, the UV segment grew 223% and only the Car segment posted a de-growth of 5%. The M&HCV number of 24,321 units and the LCV segment's number of 31,296, are probably the highest the company has ever recorded in it's long history. The Tata Nexon & Tata Hexa powered the company's UV numbers to 7,908 units, again a highest ever figure. It's only the Car segment numbers for Tata Motors, which have seen better days when the Indica & Indigo CS models were in their prime.

Tata Motors (India) ended the year FY'18 with M&HCV numbers of 190,367 units, a growth of almost 9%. Remember that this growth has been achieved despite a terrible Q1 for the company, when the SC ruling disallowed sales of BS-III vehicles across India from April'17. Tata Motors had reported 33% drop in M&HCV sales during that Quarter. This was followed by a small jerk due to GST implementation in July'17. Tata Motors' LCV sales have certainly done much better than expected. The FY'18 number has climbed to 259,072 units, a growth of over 23% Y-o-Y. This growth is mainly because of the success of new products launched about 6 months ago. Before that the company was losing market share to aggressive competition from M&M, Ashok Leyland and others. With the success of the new products in both M&HCV and LCV segments, Tata Motors has not just arrested the fall in market share, it is also clawing back some share gradually.

At the start of FY'18, Tata Motors took a conscious decision to stop pushing sales of it's older car models like the Indica, Indigo eCS and the Nano, and let them die. Together these models were generating nearly 5,000 units on a monthly basis. The chart alongside clearly shows that Tata Motors has managed to limit volume losses in the Car segment, due to the stoppage of the above models, to a very small percentage. The company managed to increase production of it's Tiago and Tigor models to around 10,000 to 11,000 units every month. But the bigger story for Tata Motors' Passenger Vehicles business is the super success of the Tata Nexon. This model is single-handedly brought a lot of excitement in the Tata Motors showrooms and also on the sales charts. The rising blue bars in the neighbouring chart is giving enough evidence of the same. The Cars + UVs business did volumes of about 1,57,300 units in FY'17. The same has now jumped to about 1,89,700 units in FY'18, a growth of about 20%. This growth has helped Tata Motors grab the No.4 position in the Indian passenger car business, jumping over Toyoto and Honda in the last 12 months. After taming the 2 Japanese giants, Tata Motors is now aiming for the No.3 spot, which is currently held by another Indian UV giant Mahindra & Mahindra. For doing so, Tata Motors might need more than just the numbers from the Nexon and the Tiago. Can Tata Motors launch another strong model in FY'19, to help it climb the ladder further? Let's wait & watch.

Tata Motors Ltd. - December'17 Sales update.

About a month ago, I wrote a report on Tata Motors Ltd., saying it's gaining it's momentum back. (Click here for that report). And the company has managed to post a stellar set of Despatch numbers for the last month of the 2017 calendar, which is normally a slow month for vehicle sales as buyers prefer to purchase a new-year model. Tata Motors despatched a total of 60,820 units during December'17, commercial vehicles & passenger vehicles combined, both Domestic & Exports put together. This is probably the first time the company has crossed the 60,000 units mark in the last few years!! The 12-months average number till November'17 was 47,135.

The star performing segments for Tata Motors are Commercial Vehicles (both M&HCV and LCV) and the Utility Vehicles segment, all recording numbers even higher than March'16 & March'17 numbers. The Cars segment was the only one showing the year-end fatigue, reporting a 16% de-growth Y-o-Y. But Tata Motors will be more than happy with the other 3 key segments firing on all cylinders. Another positive is that even the Export numbers have perked up after a long time. The 12-months average Export number for Tata Motors till November'17 was 4185 units per month. The company exported 6293 units during December'17, which is the highest number since October'16. A pickup is Export numbers, if sustained over the coming few months, will give even more support to the company turnaround efforts.

Coming to the Trailing-Twelve-Months Sales numbers for the different segments, please have a look at the following charts:

The 12-months M&HCV sales number is now just over 1,81,000 units, which is the highest level achieved during this year and is about 3.3% higher than the number at January'17. The 12-months LCV sales number of 2,32,529 is also the highest for the year and is about 9.3% higher than the number at January'17. A good momentum of sales from these segments reflects not just good times for the company's business turnover & profits, but also for the country's economy in general. The Q4 of any fiscal is generally the strongest for CV sales. Hence it will be important to see how the numbers progress for Tata Motors during the next 3 months, especially after a stellar last couple of months.

The sales of Tata Motors' passenger cars reported some de-growth during December'17. Hence we can see the 12-months number dip slightly M-o-M. But have a look at the strong jump in 12-months UV sales numbers, powered by strong demand for both Nexon & Hexa. The number, which is currently at 39,149, should cross the 60,000 mark over the next 4 to 5 months. Remember that the Average Selling Price for a UV is higher than that for a Car. Hence a small dip in Car numbers, coupled with strong growth in UV numbers, will result in stronger position for Tata Motors' Passenger Vehicles division. The combined 12-months volumes for Passenger Vehicles division in January'17 was just under 1,50,000 units. It has now risen to 1,72,000 units and should cross the 2,00,000 units mark in the next 6 to 8 months time. The passenger vehicles division of Tata Motors has been loss making for the company for the last few years, mainly due to dismal capacity utilisation. As the volumes increase, the capacity utilisation improves and will help the company achieve operating break-even soon.

Tata Motors Ltd. - Gaining it's momentum back!!

Tata Motors Ltd has been primarily dependent on it's JLR division for a bulk of it's turnover and almost it's entire Profits since the last few years. The Domestic business of Tata Motors, which was mainly dependent on it's Commercial Vehicles division, had seen a slowdown or slump for a couple of years. The company put in place a new management team and made some significant changes to it's hierarchy and then started working on a new strategy. Development of new products gained momentum, both for the Commercial Vehicles division as well as Passenger Car business. The company saw it's sales momentum turning around during the year 2016. Just as things were improving, we saw the Demonetisation take place in November'16, which disturbed the momentum for a month or two. Things started getting back to normal in January to March'17 and then we saw the Supreme Court ruling come in where sales of BS-III vehicles was banned across the country. This had a much bigger impact for Tata Motors as the production of BS-IV engines for M&HCV segment wasn't enough to cater to the volumes. The vendors weren't ready for larger volumes and it took a few months to get the volumes to decent levels. Then we had the GST kicking in from July'17, which had some temporary effect as manufacturers & dealers wanted the keep the pre-GST stock low.

Post July'17, Tata Motors has seen it's M&HCV as well as LCV segment volumes getting back on the growth path very

strongly, which is clearly reflected in the Trailing-Twelve-Months Sales chart alongside. The M&HCV segment, which is the biggest turnover contributor for Tata Motors' Domestic business, saw it's 12-months volumes fall from 1.76 lakh units in Feb'17 to under 1.62 lakh units in June-July'17. Now it is back to over 1.73 lakh units and is expected to go higher in the coming few months. The production constraints for BS-IV engines is now history and the company has seen strong demand for it's new technology products. This itself is a very big positive development for Tata Motors as strong recovery of volumes for it's M&HCV products will translate into strong turnover and profits for the company.

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Tata Motors' LCV segment saw a much smaller impact on volumes due to the BS-III ban from April'17 as there were no major production constraints for most of it's products. It's 12-months volumes did dip from peaks of over 2.12 lakh units in Jan'17 to around 2.07 lakh units during April to July'17 period. But the LCV segment volumes have seen a strong recovery to over 2.23 lakh units over the last 4 months, especially with strong demand for it's newer products like XL range of ACE SCVs and Yodha range of pickups. With decent growth momentum in the country's economy, we could see continued positive growth in sales of all commercial vehicles for Tata Motors in the coming months.

One look at the Trailing-Twelve-Months Sales chart for Passenger Cars of Tata Motors and it will give an impression of a dull

segment. But there is a reasonably-exciting story building up there, especially when combined with the UV segment. If we look at the 12-months sales numbers for Cars alone, it started the year with volumes of about 1.3 lakh units in Jan'17, then peaked at about 1.41 lakh units in May'17 and then gradually come down to about 1.34 lakh units by Nov'17. But during this period there has been a substantial change in the contributions of the different products in it's portfolio. Until about May-June'17, Tata Motors was selling it's Indica-Indigo range of cars from all it's car showrooms. These models, alongwith the Nano, were contributing about 4,000 units monthly, i.e. over 30% of the volumes. From the middle of 2017, Tata Motors decided to give all it's showroom space only to the new-age products like the Tiago, Tigor, Hexa and now the Nexon, and some space to the Zest and the Safari Storme. Hence the company has stopped sales of most of the older products, mainly the Indica, Indigo-eCS and the Nano. The small dip in 12-months sales numbers over the recent few months is because the Tiago+Tigor combine was able to substantially fill the deficit of the numbers created by near-Zero sales of the older models. The Tiago+Tigor combine is already clocking sales of about 9,000 units monthly and keeping the company's Sanand plant fairly busy. The company has started offering the Zest & the Bolt for the Cab-operators.

The UV segment is the only one for Tata Motors which has seen a consistent positive M-o-M increase in the 12-months sales figures. Upto August'17, all the credit for the positive progress went to the Hexa, which has seen decent demand since it's launch. But the recent launch of the Nexon is pushing Tata Motors' UV sales number into a different trajectory. Within just 3 months of Nexon's launch, the 12-months sales number of UVs has reached a level nearly 80% higher than what it was at the start of the year. We can see the 12-months number, which is currently at about 34,000 units, reach about 60,000 units mark in another 6 to 8 months time.

In November'17, Tata Motors has managed to grab the No.3 rank in terms of sales of Passenger Cars & UVs, closely beating Mahindra & Mahindra. It will be very interesting to see these two Indian manufacturers push each other in their fight for the No.3 spot. Until a few months ago, Tata Motors was fighting for the No.5 spot with Toyota, but that seems to be history now. Even Honda has seen it's monthly sales number being very volatile in the recent months and has kind of given up on the race of the No.3 position. Renault & Nissan combine too has seen their Kwid-Redigo sales momentum lose steam in the recent months. If Tata Motors manages to carry on with it's sales momentum, it should be the un-disputed No.3 in the Indian passenger car market in a few months time, behind Maruti Suzuki and Hyundai.

Car Market-shares in Q3 & Demonetisation impact

After selling a record number of cars, totalling to 7.9 lakh units, during Q2-FY'17 (i.e. July to September) and recording a healthy Y-o-Y Growth of almost 18%, most of the car makers were looking forward to a buoyant second half of the fiscal. The 14 car brands (excluding the luxury & super-luxury segments), whose sales data I have considered here for my analysis, then followed it up with another new monthly record number of car despatches in October'16 at 2.78 lakh units. Then came the 8th November announcement from our PM about demonetising the Rs.500 & Rs.1000 currency notes, a step which is expected to bring substantial positives for the country & it's citizens over the longer term, but was certainly expected to negatively impact sentiment & business dynamics in various sectors in the near term. The Passenger Car market was not going to be any exception. But the Total Volume Despatch numbers from the 14 car makers in India for the month of November'16 posted a Y-o-Y Growth of 2%, surprising most analysts. But 6 of the 14 brands had reported double-digit % Drop in Sales for November'16. The main Growth drivers were Maruti Suzuki, Volkswagen, Tata Motors & Toyota, who all posted double-digit % increase in despatches.

After a not-so-disappointing November'16, all eyes were on December'16 numbers as the month was going to face not just Demonetisation blues, but also the year-end effect too. Maruti Suzuki & Tata Motors posted a 15+% M-o-M Drop in despatches, though on a Y-o-Y basis it was just about 5% lower for Maruti Suzuki and over 30% increase for Tata Motors. But a smart M-o-M improvement in despatch numbers for manufacturers like Honda, Mahindra, Renault, Volkswagen & Toyota helped restrict the deficit created by fall in numbers from the market leader, to a relatively small number. The Total Despatch volumes for the 14 car makers was just 1.4% lower on a Y-o-Y basis and 6% lower on a M-o-M basis.

The Demonetisation announcement was expected to create near term issues for the automobile industry, not just on the demand side, but also on the supply side. The lack of currency notes in the system was expected to create issues in terms of problems in movement of Goods as well as factory workers needing time off from work to visit the bank and things like that. November & December'16 were expected to have the maximum negative impact with the impact decreasing towards the end of December. If we go by the Despatch numbers for November & December'16 together, the Car industry as a whole has managed to produce & despatch almost the same number of vehicles as it did in last 2 months of 2015. This data point tells us that things were not as bad on the ground as being made out to be by the several News Channels & Economists. Ofcourse we cannot jump to any specific conclusion so soon and we will have to keep an eye on the monthly numbers for another few months before we can arrive at some conclusion with regard to effect of demonetisation on the Car industry. But the numbers from the industry for the first 2 months have been a bit of positive surprise. Hopefully it will stay that way in the coming months too.

Coming to changes in Market shares for the Car Industry, the table alongside shows the market shares of different manufacturers for Q3-FY'16, Q2-FY'17 and Q3-FY'17 to give us an idea of how things have been moving. India's No.1 Car maker, Maruti Suzuki has seen it's market share drop by about 50 bps Q-o-Q, though it is still higher Y-o-Y. On the other hand, No.2 manufacturer Hyundai's story is exactly opposite. It's market share has shown nearly 140 bps improvement Q-o-Q, but it is still lower on Y-o-Y basis. No.3 player Mahindra has managed to hold on to it's market share Q-o-Q, but is about 110 bps lower on Y-o-Y comparison. At No.4 is Renault-Nissan Alliance, which has seen a near 60 bps Q-o-Q erosion in market share, but is still significantly higher in Y-o-Y comparison. Renault-Nissan Alliance will now be gunning for the No.3 spot in the new year. At No.5 & 6 are Tata Motors and Toyota, both seeing an improvement in market share in Q-o-Q as well as Y-o-Y comparison. But Tata Motors has clearly outperformed Toyota as it was 25 bps behind the latter in Q3-FY'16, while it is now ahead by over 50 bps this year. With 2 or 3 significant new launches lined up for 2017, Tata Motors will look to continue it's march up the market share chart. Honda continues to be the biggest loser in the pack this year with it's market share dropping another 90 bps Q-o-Q. Honda was comfortably at No.4 position in Q3 last fiscal, then dropped to No.5 position in Q2 this fiscal and is now at No.7 position in Q3 this fiscal. The latest launch of BR-V or updated versions of Brio & Amaze don't seem to have helped Honda arrest it's sales slide. It is now preparing to launch the new City model, which should certainly help gain some of the lost market share back. Just like Tata Motors & Toyota, Volkswagen Group too has seen improvement in it's market share both on Y-o-Y basis as well as Q-o-Q basis. But I don't think it will be able to overtake Ford Motor to grab the No.8 position in the near future.

As with any December, most manufacturers had threatened to hike their product prices by 1 to 3% from January'17, but they might have to postpone their price-hike decision depending on the demand for their products in the new year. Generally the manufacturers bring a few updates to their existing models while hiking prices. Let's see if the manufacturers are able to pass on the price hike to the consumers or it is nullified via increase in discounts.