Tata Motors has launched the new Punch at a starting price of Rs 5.6 lakh. At this price point, it will compete with the likes of Swift, Mahindra KUV100, and Hyundai Grand i10 Nios.
The festive cheer for Tata Motors has also been impacted due to the chip shortage but the company continues to be on a steady growth path. CNBC-TV18 spoke to the president of the PV business unit at Tata Motors, Shailesh Chandra.
On subcompact SUV, Chandra said, "Tata Punch as you know is the first subcompact SUV that we are launching in the Indian market. We have been seeing the growth of SUVs in the last 10 years. If you see globally it has increased by six times in volumes and even in India if you see in 2010, SUVs used to be just 9 to 10 percent of the Total Industry Volume (TIV) which grew to nearly 15 percent in 2015, and now this financial year, it is at 40 percent. If you really see the proliferation of SUVs on the back of these - the last five years what growth we have seen in the launches it has been restricted to SUVs which are above four meters in length. There has been a complete void for those customers who are looking for a sub-four meter SUV which is an uncompromised SUV and this is what the Tata Punch as an idea or a concept was to fill this void that existed in the Indian market.”
He added, "This is the first product of its kind in the category in which I talked about. This is going to really attract customers in the adjacent segments who would be really looking for an SUV option otherwise they had a hatch or a compact sedan only as of the options available. This is a big market, nearly 50 to 60 percent of the market lies in the sub-four meter category. Therefore, there is a huge opportunity that I see for Tata punch.”
Read Here:
He said the company had started the bookings around October 4 and they have seen a tremendous response. He refused to state the number of bookings citing policy reasons but added that this was the highest booking that they had received before launching for any product in their portfolio.
On price hike, Chandra said, "The commodity prices have been on an increase for last nearly four or five quarters. This has been to the extent of nearly 10 percent of our revenue. We have only passed on about 3.50 percent or so to the market and the rest have been to great extent being supported by the cost reduction actions that we have taken internally. We will have to see how the commodity prices are going to play from here and basis that there is definitely a pressure of going for a price increase. But we will make a judgment on that in the coming months."
On the demand and supply gap, Chandra said that they have been facing a supply issue. "Right from the start of quarter two, because of the Malaysia COVID crisis which had a cascading effect on the semiconductor supply emanating from one particular semiconductor supplier and that has impacted some of the critical electronic components and therefore Q2 volumes you would have seen had got impacted. However, we have been taking different kinds of measures to mitigate the impact of the semiconductor crisis and we have performed better than the industry. So, we have found out some ways to mitigate this, but definitely the potential what we had in this festive season in terms of demand, the supply is definitely lagging a lot behind that. So yes, in terms of meeting the demand, we have been lagging on the supply side, but still, it is strong as compared to where we were last year or where we would have been even in the last quarter.”
"Malaysia COVID situation is expected to subside in the next coming months is what we expect. But there is definitely a lag between the extent of demand that we have created right and where the supplies are. Also, remember that there is a huge part of this demand, which is also coming from Tata Punch. So, therefore, we have to really take or reconcile the situation at the end of the month.”
On retail growth, he said, “We are clearly seeing a growth versus the last year and it would be in high double digits, I would say, for us also, because we have been able to really supply more than what otherwise the industry would have, because of some proactive planning that we had done, we had started the production of Punch in September itself to be ready for the launch. So our retails have been in the high double-digit, I would say, as compared to where we were in the last financial year.”
On capacity unitisation, he said, “We would be upwards of 75-80 percent depending on which plant we are talking about. But on average, this would be the utilization, we are now fully utilized in locations more than utilized I would say in places like Ranjan Gao or even Pune is coming very close to you know, 80 percent plus utilization and it has the potential of getting fully utilized as we are making for models there and Sanand capacity is also very close to 70 percent-plus level.”
For full management commentary, watch the video.
Also Read: Auto sales fell 50% during Navratri; semiconductor availability still unresolved: Maruti Suzuki
Check out our in-depth Market Coverage, Business News & get real-time Stock Market Updates on CNBC-TV18. Also, Watch our channels CNBC-TV18, CNBC Awaaz and CNBC Bajar Live on-the-go!
Lok Sabha Election 2024 Phase 5: 24% voter turnout recorded till 11 am, highest in Bengal at 33%
May 20, 2024 10:30 AM