Tata Motors Share Price Takes A Hit As September Sales Numbers Bring Bad News

The September sales numbers have led to a sharp fall Tata Motors share price. The shares fell over 3% on the back of a 9% fall in car sales for Tata Motors which stands as a key negative for the company before the festive season kicks off.

As of 1:55 pm, Tata Motors shares were trading 3.84% lower at Rs 927.60 per share.

Generally, apart from the routine retail sales, auto companies build up inventory a month in advance in anticipation of festive demand. For Tata Motors, its car sales between April and August had fallen 3% compared to last year.

Due to lower sales reported in the preceding 5 months of FY25 and festive demand anticipation, analysts had actually expected a 9% growth in sales for Tata Motors. Apart from this, the company's commercial vehicle or truck sales have also fallen by 23% in September versus analysts' expectations of 10% fall in sales.

Inventory Builds Up

The retail sales of cars were affected due to the 'Shradh' period between September 17 and October 2, 2024. This impacted overall sales for Tata Motors as well. A slower growth in wholesales despite a 3% fall in sales in the first 5 months of FY25 indicates that the inventory is still at a meaningful level for the likes of Tata Motors than earlier anticipated.

According to Motilal Oswal, inventory levels for Tata Motors is the highest at 60 days, Maruti Suzuki stands at around 55-60 days, while the same for M&M stands at 40-45 days. It expects dispatches for Maruti Suzuki including LCVs / M&M/ Tata Motors to grow 3% /3.5%/7% YoY.

Differentiated Strategy By Car Makers  

We have seen a differentiated strategy from automakers and especially four wheeler makers in this month in terms of dispatches to dealers or wholesales. M&M has continued its growth path of growing 15-20% every month in this fiscal year. Demand for their products launches like 3XO has been very well received by the market.

Maruti Suzuki has had a slower growth of 1% in FY25, and the same course has been maintained in September as well.   

For Tata Motors, their sales have been lowest amongst the listed players.

Going Forward

The company has been taking a few measure to correct falling sales. The company announced price cuts across its range of vehicles except Punch. Price reductions have been in the range of INR 10,000-80,000 for Nexon, INR 15,000-30,000 for Tigor, INR 15,000-60,000 for Tiago, INR 50,000 -180,000 for Safari models and INR 50,000-160,000 for Harrier.

Despite these reductions, there are additional discounts of INR 15,000-25,000 on the models, including Punch.

Test drive cars for Tata's ICE variant of Curvv have not yet reached the dealerships, leading to postponement of purchases by customers.