Mumbai: Tata Motors, India’s leading commercial vehicle manufacturer, has announced a price increase of up to 3% across its entire commercial vehicle range, effective January 1st, 2024. This move comes as a response to the ongoing impact of rising input costs.
The company cited residual input costs as the primary reason for the price hike. This marks the third price increase for Tata Motors’ commercial vehicles in the past year, following similar announcements in October 2023 and September 2022.
While commodity prices like steel and precious metals softened in Q2, providing some relief to margins, Tata Motors anticipates a potential resurgence in commodity headwinds, particularly from steel, in Q3.
Commercial Vehicle Market Share and Profitability
Tata Motors maintains a strong position in the commercial vehicle market, holding a 41.7% market share in FY23. This share slightly increased to 39.7% in Q2 FY24, primarily driven by growth in the heavy commercial vehicle segment.
According to PB Balaji, Tata Motors’ group Chief Financial Officer, strong product mix and increased realizations stemming from lower discounts and commodity prices have contributed to the company’s improved commercial vehicle profitability.
“We expect moderate commodity inflation in the future, but realizations will remain strong. Our focus now lies on ensuring each business unit reaches its targeted profitability,” Balaji stated, expressing optimism for continued profitability in the commercial vehicle segment next year.
Future Outlook and Growth Drivers
While facing some challenges in the small commercial vehicle segment, Tata Motors remains committed to improvement and growth. The company sees positive prospects in heavy commercial vehicles, driven by an aging fleet and renewed demand. Currently, commercial vehicle capacity utilization stands close to 60%.
Tata Motors’ commitment to electric vehicles received a boost with the recent acquisition of the PLI certificate for its ACE EV, marking it as the first four-wheeler commercial electric vehicle to achieve this milestone.
The truck manufacturer anticipates double-digit growth in the MHCV segment for Q3. However, President and Head of the Commercial Vehicle Business Unit, Girish Wagh, predicts flattish growth in Q4 due to a high base. He refrained from making definitive statements about FY25 due to the upcoming general elections in India.
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