India's Tata Motors Posts 49% Hike in June Sales Volumes

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Researched by Industrial Info Resources (Sugar Land, Texas)--In a July 1 press release, Indian automotive vehicle manufacturer Tata Motors Limited (BSE:500570) (Mumbai) announced that total vehicle sales, including domestic sales and exports, stood at 67,730 vehicles, which is 49% more than the 45,440 vehicles sold in June 2009. Tata Motors sold 62,602 commercial and passenger vehicles last month, which is a growth of 45% from the 43,284 such vehicles sold in the corresponding period last year.

Click on image at right for a table detailing yearly automobile production trends in India.

In the commercial vehicles section, the company sold 34,791 vehicles in June, of which light-commercial vehicles and medium- and heavy-commercial vehicles accounted for 19,652 and 15,139 vehicles, respectively. These numbers are higher by 33%, 21% and 52%, respectively, from production levels in June 2009.

The total sales of Tata Motors' commercial vehicles stood at 97,229 units, of which light-commercial vehicles accounted for 55,073 units, and medium- and heavy-commercial vehicles sales accounted for 42,156 units, respectively. These numbers are higher than the comparative period by 35%, 21% and 58%, the company said in the release. Tata Motors' passenger vehicle sales in the domestic Indian market in June 2010 stood at 29,948 units, a 53% increase from June last year.

In the export market, the company sold 5,128 vehicles in June this year, which is 138% higher than the 2,156 units exported in the same month last year.

In fact, Tata Motors has edged out Korean automobile manufacturer Hyundai Motor Company (KSX:005380) (Seoul, South Korea) from second place in India's monthly domestic passenger vehicle sales. It is understood that the growth in Tata Motors' production and sales levels are attributed to its increased sales of the Nano car, after the new Nano manufacturing unit in Gujarat was commissioned last month.

"Going forward, our expectation would be to maintain the No. 2 position in the industry," a company spokesperson told local media.

Industry analysts also averred that the company is well placed to be able to sustain its auto sales growth trends. Abdul Majeed, the national head of Automotive Practice at professional services firm PricewaterhouseCoopers (London, England), said that "the newly created Nano-segment has huge opportunities and therefore, Tata Motors is likely to sustain its numbers because of the higher volumes it will generate."

Other automotive companies such as Maruti Suzuki India Limited (BSE:532500) (New Delhi), Ford India Private Limited (Chengalpattu, Tamil Nadu) and General Motors India Private Limited (Halol, Gujarat) recorded surges in production and sales volumes in June, when compared with the same month last year.

Mahantesh Sabarad, a senior analyst at Fortune Equity Brokers India Limited, an arm of financial services firm Fortune Financial Services (India) Limited (BSE:530023) (Mumbai), was quoted as saying, "There was a pent-up demand for cars in the country, which has overflowed into this year."

According to sources, India remains a "highly under-penetrated" market, with only about eight cars for every 1,000 individuals. This is very low compared with the U.S., where there are about 850 cars for every 1,000 people. Industry sources believe that this low market penetration will keep the Indian demand for vehicles bubbling and thereby continue to make the country attractive to global automotive vehicle manufacturers.

Steel production in India, however, increased only 1.8% in April, on a year-on-year basis. The Indian steel production in the first four months of this calendar year has been recorded at 21.6 million tons, which is 10% more than the corresponding period last year.

Meanwhile, the auto sector's expansion plans are booming. Tata Motors, which currently produces its Nano car at its plants at Pantnagar in the northern state of Uttarakhand and at Sanand in the western state of Gujarat, is planning to increase its Nano production capacity to 30,000 units by March 2011. "At present, vendors are supplying components for an average of about 10,000 units of Nano every month, but they have been told to scale it up by March 2011," a spokesperson of a firm supplying major components to Tata's Nano facilities told local media.

"Considering the volume of orders, Tata Motors could be aiming for a combined output of 360,000 units per year of Nano from Pantnagar and Sanand by 2012," another industry source said.

Meanwhile, the company will raise about $1 billion by issuing securities in the domestic and international markets, in a bid to fund expansion programs and reduce debts.

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