Tata Motors expects the domestic passenger vehicles industry to grow in double digits in 2021-22 on the back of continued robust demand momentum driven by a shift towards personal mobility in the aftermath of the COVID-19 pandemic, coupled with a low base effect, according to a top company official.
Despite uncertainties over increasing commodity prices and the supply of semiconductors, Tata Motors expects its growth in the upcoming fiscal to be better than that of the industry.
“There is a momentum which continues on the demand side because of the shift towards personal mobility. That will remain till everybody gets vaccinated. We don’t know when everyone will get vaccinated,” Tata Motors President – Passenger Vehicle Business Unit Shailesh Chandra said.
Still, people will be cautious and therefore there is this gravity towards personal mobility, he said adding “there might be some permanent shift that has happened in favour of personal mobility”.
When asked about the company’s outlook on the growth of domestic passenger vehicle sales, he said it would be at least double-digit.
As for Tata Motors, he said, “We would expect growth to be much better than the industry.”
Elaborating further on the company’s bullish growth outlook, Chandra said, “As we are getting closer to the end of this quarter, possibly we, the industry will end the quarter with very low levels of inventory.”
“A low inventory situation, unserviced demand of many customers across the industry and booking momentum remaining the same with a shift towards personal mobility, I think all these are very favourable factors for growth,” he added.
While the industry has to replenish the whole system with inventory, he further said the demand momentum should continue going forward.
Chandra, however, said that “Supply-side has always been an uncertain thing. We will have to see how it pans out for everyone. The whole semiconductor issue, how the steel (prices) will peak, with those kinds of uncertainties and riders, I think otherwise from a demand-side perspective there are opportunities which are very clear.”
Specific to the semiconductor issue, he said it continues to be a concern that needs to be dealt with almost on a daily basis unlike in the past when the company had a “visibility of at least two to three months” of supplies.
On the current challenges for the auto industry, he said it has been the cost increases due to various factors, but the manufacturers have not been able to fully pass it on to the market as it is still yet to fully recover from the impact of the pandemic.
“The BS-VI transition itself was a big cost increase. Then you have the precious metal prices which keep increasing. The steel price increased in quarter three as well as quarter four, we are dealing with that. It remains very uncertain,” he said.
Chandra further said, “These are the cost increases which have impacted us possibly more than 5-6 per cent of our revenue, I would say. Whereas, we have not been able to transfer that into the market.”
While the growth has been there for the industry, he said, “We might end this year with 5 per cent plus-minus as far as industry decline is concerned. Therefore, we are not out of the woods till this whole vaccination drive goes, how the whole continuity of this demand will be.
“All the industry players will be a bit cautious in taking those kinds of step (price hike) but we cannot rule out that considering the whole scenario.”