Tata Motors plans fresh wheels
Business Standard — November 12, 2007

New launches crucial as the company is currently witnessing high product fatigue.

The country's largest automobile company Tata Motors is readying a slew of launches in the commercial vehicle (CV) segment during 2008 to counter increasing competition and also revive demand.

"We have lined up a new range of commercial vehicles which would help us fight out competition," PM Telang, executive director (commercial vehicles), Tata Motors said.

Pune-based company also announced it would roll out a new range of passenger cars during 2008.

The new launches are crucial as Tata Motors is currently witnessing high product fatigue in both passenger car and CV segments resulting in languid sales in the current financial year.

The company's CV sales had slipped 3.4 per cent year-on-year during the April-September period.

"Only light CV sales have seen a rise during the first six months of 2007-08," said Telang.

Sales of the popular light CV Ace were fairly strong in the first half (April-September) of the current financial year, averaging 6,500 units a month.

Telang said the company would first introduce a new range of pick-up trucks early next year.

The pick-up launch is important as that particular segment is gaining popularity in India as seen in the success of Mahindra & Mahindra's 'Maxx' pick-up truck.

Telang said the company is also working on a 15-tonne-plus commercial vehicle that will be rolled out during the later part of next year.

Competition
Telang said the country's largest CV company was banking on the spate of new launches to counter increasing competition in the market.

The CV market, which has been growing at a modest single-digit rate so far this financial year, has attracted the attention of big foreign players thanks to scorching growth in the light commercial vehicle segment.

Recently Japan's Nissan entered into an alliance with Ashok Leyland to make commercial vehicles in India.

German auto company DaimlerChrysler too is eagerly scouting for partners in the country for its commercial vehicle business.

France's Renault too is exploring partnership opportunities for its commercial vehicles foray.

Even Michigan-based giant Ford Motor Corp is said to be eyeing the space.

Light commercial vehicles comprise about 40 per cent of the commercial vehicle market in the country.

According to the Society of Indian Automobile Manufacturers, 192,282 light commercial vehicles were sold last financial year, up 34 per cent year-on-year.

Interest rates
"Interest rates continue to impact commercial vehicle sales," said Telang.

The Indian auto market has been hit in recent months by a sharp rise in interest rates, which have risen almost 350-400 basis points since December last year.

Almost 95 per cent of CVs are purchased on credit in the country.

"During the first half of the current financial year, only light commercial vehicle sales have grown, while medium and heavy commercial vehicle sales continue to suffer," he said.

According to the Society of Indian Automobile Manufacturers, medium and heavy commercial vehicles sales have fallen 5.1 per cent year-on-year during the April-September period, while light commercial sales have risen 14.75 per cent on year during the same period.

"Higher interest rates and lack of finance to purchase vehicles has forced customers to defer buying decisions," an analyst said.

Outlook
Telang said April-September commercial vehicles sales for the company had not been as bright as was expected.

"However, we are bullish on the October-March period and expect sales to pick up," he said.

Analysts said commercial vehicle loan rates are showing signs of decline, which would boost sales.

"Large truck operators are now getting loans at 9.5 per cent compared with a peak of 14 per cent in April. Smaller truck operators, too, are getting loans at 10-11 per cent," an analyst with a Mumbai-based brokerage said.

Shares of Tata Motors on Friday closed at Rs696.30 on the Bombay Stock Exchange, down 1.42 per cent from the previous close.