Stress to continue for another quarter: Tata Motors

The Altroz is to be launched soon and Tata Motors is betting big on this premium hatchback. The car has been drawing a lot of attention with its premium features and Bharat Stage-VI compliant engines.

“We call it the gold standard car for several reasons,” said Mayank Pareek, President, Passenger Cars, Tata Motors.

“It is the safest car in this category, stands out in terms of design, has good driving dynamics and there is ample technology in it. This is the first car based on ALFA architecture, which is our global architecture for future products. In all, this car meets global standards,” he added.

This is a time when the Indian automobile industry is going through a slowdown that has lasted for almost the whole year.

“You can’t deny that there is a slowdown. The two important questions are why there is a slowdown and how long it will last. This year is special because there were a lot of uncertainties. At the beginning of the year, there were reports that the GST will come down. That created confusion and the customer put off buying a car because it is not a vital purchase. This continued till October,” he said.

“The second issue has been the upcoming switch from BS-IV and BS-VI emission norms. Earlier, there was confusion if a BS-IV vehicle will continue to remain registered after purchase. The clarification for this was in September and it came too late.

“The last reason, according to me, is finance availability. Liquidity is there theoretically but giving finance to the customer has come down. Earlier, finance up to 92% was given but it has now fallen to about 68%. People have changed from exuberance to caution,” he added.

However, the veteran of the automobile industry is optimistic and feels the scene will improve in the coming months, most likely in the first quarter of the next financial year.

“I think we will see stress for one more quarter. People are changing to BS-VI and prices of the cars will increase. Tata Motors will increase prices very shortly across the board because of BS-VI and commodity (materials like metal and rubber) price increase. So, the last quarter of this year will be difficult. But I think the first quarter will see growth, but it will be slow and steady,” he felt.

“ I am confident because, in India, only 29 out of 1000 own a car. Millennials are very different and unlike the previous generations. People of the previous generations would buy a car towards their retirement. But all millennials want a car. This is the generation that drives consumerism. Economies throughout the world are driven by consumerism. If you look at the Harrier, 15-16 % of the customers are first-time buyers,” he stated.

Staying with auto sales, the Indian trend has been of reporting wholesale figures as against the global trend of reporting retail sales. “In December last year, we started reporting retail sales and we do so every month. Wholesale means nothing and it just transferring cars from the factory to the dealer. Globally, retail sales are reported and India is slowly moving towards that. My guess is that within a year or so, it will become retail reporting,” he said.

The current talk in the automotive industry is the switch from BS-IV to BS-VI emission norms from April 1 next year. The government is implementing new norms due to serious environmental pollution concerns. Automakers have already begun rolling out BS-VI compliant cars and oil companies have said that they will be ready with the new, cleaner fuel by the time the new norms kick in.

On the drastic emission norms change, Pareek said: “One big change from the switch this time to BS-VI is that no BS-IV car will be registered from April 1. During earlier emission norm switches, if a car was produced till March 31, it could be registered for the next six months. And Tata will sell only BS-VI cars from January. We did very well in October and our stocks came down to an 82-month low.”

There is hesitation in the customer about the compatibility of existing fuel with the new BS-VI engines till the new fuel is available. “BS-IV fuels should not be used in BS-VI vehicles. Our engineers tell me that it will damage the emission system. Tata BS-VI cars are ready and in talks with refineries. That is the advantage with Indian companies because we can talk to them and understand their plans,” he explained.

Close on the heels of the emission norms switch discussion is electrification. India hardly seems to be ready for it.

“I think EVs have been growing globally. But in India, battery price is an issue and so is range anxiety. However, my personal view is that these issues will slowly and surely be addressed and electric will happen,” he said.