Despite being the dominant company in the segment, Tata Motors has faced stiff competition from Mahindra and Mahindra Ltd, which is running neck-and-neck with it in the light commercial vehicles (LCV) segment.
In fact, in April, M&M had surpassed Tata Motors, capturing 37.1% of the market share, while Tata Motors was a shade lower at 37%, according to VAHAN registration data compiled by the Federation of Automobile Dealers Associations of India, or FADA. Notably, in April 2022, Tata Motors’ share was at 38.9%, against M&M’s 36.1%.
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In FY23, Tata Motors’ market share fell by 420 basis points in the segment, while M&M gained 370 basis points. Data also showed that Tata Motors saw a consistent year-on-year decline in market share during the second half of FY23.
Tata Motors’ strategic move to reduce retail market discounts resulted in better realizations compared to its competitors, and the company is gradually regaining market share on a sequential basis throughout the previous and ongoing quarters.
“If you look at the commercial story over the past 8-9 months, our variable marketing expenses, or discounting in the marketplace, came down drastically. We have taken a big lead, and we are continuing with this lead, which means we would only focus on our product offerings and the larger ecosystem of services and value to our customers,” Rajesh Kaul, vice president, sales and marketing, commercial vehicle business at Tata Motors, said in an interview.
“We are engaging with our customers through the sale and resale journey. We are also proving to the customer that their costs will go down and discounts are also helping us improve our profitability,” Kaul added.
In the March quarter, Tata Motors’ net realizations rose 18.3% from a year ago, compared to Volvo Eicher Commercial Vehicles Ltd’s 10% growth, and Ashok Leyland’s 8.5% improvement.
“Our assessment on the ground is we are winning market share. From October till May, we gained 3% VAHAN market share, led by our small commercial vehicles and the Intra range. The new range of pick-ups launched in September is contributing significant volumes. We are also getting efficient in managing our inventory. In the less than 3.5-tonne segment, our inventory at dealerships used to be at 28,000-30,000 vehicles, but is down to 17,000. We are more focused on retail,” Vinay Pathak, vice president, product line, small commercial vehicle and pick-ups, at Tata Motors said.
“Tata Motors is focusing on profitability over market share especially from the second half of FY23, to reduce its net debt. It has a tight lid on discounts, hence improving net margins in Q4FY23, and the management expects the focus on profitability to continue through FY24,” Jay Kale, senior vice president, Elara Capital, said.
The company has also been losing market share in the medium and heavy commercial vehicle segment, which fell by 190 basis points sequentially. It leads the mini-truck category (up to two tonnes) with its Ace range, garnering nearly 65% market share, and accounting for around 35% of the segment’s total volumes. In the 2-3.5 tonne category, it accounts for a 20% market share, while M&M leads with 65%.
The overall LCV category, consisting of vehicles up to 7 tonnes, grew 27% year-on-year in FY23 to 603,465 units and are now 2% below its FY19 peak, according to equity research firm Elara Capital.
Ashok Leyland, which currently has no play in the 0-2 ton LCV segment is also planning to compete in the market with a new product, and grow its share share of 2-3.5 ton LCVs to 25%, from 20% at present.
Mahindra’s market share in the 0- to 3.5-ton category has increased from 41.5% in FY21 to 45.5% in FY23.