Steering Through Changing Times: What Has Been & What Is To Come For The Automotive Industry

Vivek Srivatsa Jan 03, 2023

Prevailing over some of the most challenging years, amidst a devastating pandemic, supply chain issues, semiconductor shortages, and a severe fall in demand, the Indian auto sector has had quite a ride. Amidst unprecedented challenges, leading players have stepped up, implementing firm steps to reset focus, spur demand, and fuel growth. This year has, consequently, been momentous, with the auto sector showcasing its strongest performance over the last three calendar years.

November 2022 sales crossed the 300,000 threshold for the sixth month in a row, and estimates suggest wholesale volumes for the passenger vehicle segment will peak at 3.7-3.8 million units in 20221.

With the drive towards sustainable mobility and electrification, the coming year will offer exciting possibilities for innovation and growth. Consumer eagerness is at a high, and we must continue to be in touch with their emerging aspirations to make the best of this opportunity. As we stand at the cusp of a new year of growth, it seems like an appropriate time to take stock of our past victories and chart a roadmap for a successful future.

A look back

2022 was a positive year for the industry at large, with sustained consumer demand and healthy sales. Tata Motors, as a pioneer in the sector, remained at the forefront of this rising trend, working actively towards boosting growth. A strong connection with customers and a line-up of industry-leading cars that offered unmatched performance and safety in modern, stylish exteriors all contributed towards strengthening the brand’s performance considerably.

We continued to dominate the electric vehicle (EV) space with a portfolio spread across body styles. The Nexon EV became the country’s 5th most-selling car, whereas our recently launched Tiago EV model became India’s most affordable EV2. November marked the rolling out of our 50,000th electric vehicle, rendering Tata Motors the industry’s first OEM to reach this production milestone for EVs. Recognising the necessity of flexibility and diversity in relatively eco-friendly mobility, we also adopted a unique multi-powertrain strategy, with multiple fuel options including CNG. Our EV and CNG vehicles comprised a significant 18-20 per cent of the total sales3.

Levers for future growth

Pertinent setbacks over the past three years prevented the automotive segment from growing. With 2023, we have the opportunity to push the momentum through the barriers. We must keep a pulse on consumer sentiment to roll out the right products with cognizant branding, and a strong fulfillment strategy. Creating an agile supply chain will be, as the pandemic has taught us, imperative for a healthy ecosystem. Most importantly, scaling for profitability will be crucial for companies. Tata Motors’ remarkable increase in profit owes largely to effectively operating leverage, and we plan to continue this approach going forward as well.

Besides this, the introduction of several new products, that represent a modern, tech-savvy future, will go a long way in propelling growth. More players are opening up the EV market, and we can expect lower battery prices and a wider customer base. As the biggest market player in this segment, we plan on aggressively expanding our EV portfolio, moving from our first-generation platform to the second, with the roll-out of the production versions of the Tata Curvv and Avinya, which also happens to be our Gen 3 pure EV concept, by 2025. Besides EVs, we will also expand our SUV as well as our CNG offerings, keeping our portfolio fresh with frequent new introductions.

Scaling new heights

Going ahead, there are both tailwinds and headwinds at play. Some positives include the softening of commodity prices, including that of steel, and moderately priced CNG that is likely to drive demand. The main roadblocks include the inflationary pressure in markets that might affect consumer income and the effect of regulatory policies. Ultimately, it will be important for OEMs to broadly monitor the interplay of these factors and balance their effects to maximize growth. With a plethora of new models in the pipeline, especially in the EV segment, consumer excitement is likely to remain up.

As a whole, the automotive sector must keep its head up to ensure an upward growth trajectory. Tata Motors will, in line with this sentiment, strive to make the most of its products, expanding its portfolio to grow volumes and market share. We are planning to invest $2 billion over the next 5 years in the EV segment, which will significantly accelerate our expansion.

This year was significantly better than the preceding 2 years and was marked by our efforts to combat challenges, manage crises and emerge triumphant. The coming year will be different and will require us to put our best foot forward for a record-breaking performance befitting the ushering in of a new era of mobility.