Bolt, Zest could be turning point for Tata Motors: Moody's
Tata Motors, which has steadily lost market share over the last few years, is likely to get a boost from the new models it unveiled at the Auto Expo last week, Moody's Investors Service said on Monday. The introduction of Bolt hatchback and the Zest sedan could be a "turning point" for Tata Motors in India, Alan Greene and Vincent Tordo of Moody's said.
"Tata will be much better placed to compete with Maruti Suzuki, Hyundai Motor and Mahindra & Mahindra, as well as the global big four, Nissan Motor and Honda Motor, which have been nibbling away at Tata's market share," the analysts noted.
Tata Motors' market share in the passenger vehicle market fell to 8.5 per cent for the nine months to December 2013, from around 12 per cent in 2012-13 and 14 per cent in 2011-12. In commercial vehicle segment, its share fell to 50.5 per cent for the nine months to December 2013, from 56 per cent in 2012-13.
India's second biggest automaker suffered from an environment of high interest rates and fuel prices in an economy growing at its slowest pace in a decade, but it also paid the price of persisting with an ageing fleet. Tata's last new car launch was the Aria in 2010, a crossover sports utility vehicle and before that, Nano in 2009.
Last year, many of Tata Motors rivals launched a number of popular models. Honda Cars came out with its entry-level sedan Amaze, while Hyundai Motor launched the Grand i10 hatchback. Tata, meanwhile, only tweaked and refreshed existing models.
"...these latest products possibly mark the turning point and are certainly the most tangible results to date of Tata Motor's Horizonext strategy and its design innovations that should make TML's offering more attractive to new consumers," Moody's said.
The introduction of new petrol models will help the company gain traction at time when the demand for diesel cars has started softening for the first time in many years.
Moody's analysts say diesel prices have risen by about 30 per cent since August 2012 and will increase by another 10 per cent in 2014 if oil marketing companies continue to hike prices at the current rate. The price of petrol is rising less rapidly than that of diesel, they noted.
Both Bolt and Zest are expected to hit the road in the second half of this calendar year. Tata is introducing 18 new vehicle and concept cars across its product divisions from cars to heavy trucks at the event.
Shares in Tata Motors, which will report quarterly numbers later in the day, closed 1.1 per cent higher at Rs 364 on the BSE, outperforming a Mumbai market that ended 0.2 per cent lower. (Track stock)
Will Nano get a boost?
Moody's says Maruti 800's presence arguably prevented Nano from becoming the people's car as originally intended. However, it adds that the trend towards small cars is becoming more sophisticated.
Roadblocks ahead:
Moody's says the boost from new modes might be short lived because consumer spending remains constrained owing to high inflation and tight credit conditions. Domestic sales of passenger vehicles and light commercial vehicles (LCV) are likely to remain flat in 2013 compared to 2013.
