Tata Motors has been pinning a lot of hope on new launches like the entry-level sedan Zest to turn around its dwindling fortunes in the domestic passenger vehicles market. And if the Zest’s August sales numbers are anything to go by, it seems to be on the right track.
Zest sold 2,671 units in August, according to data sourced exclusively from Society of Indian Automobile Manufacturers (SIAM). SIAM had not given out the first month sales numbers for the Zest publicly. To be sure, the Zest was launched on August 12 and therefore the sales numbers for that month are for only around 20 days.
The traction that Tata Motors’ passenger vehicles sales has gained from the Zest is evident from the fact that Zest sales constituted nearly a quarter of the 10,975 vehicles that the carmaker sold in August. The new launch helped the company improve its sales numbers over July, in which month it sold 9,167 vehicles.
Tata Motors’ dealers and analysts who track the company are witnessing significant demand for Zest and expect its sales to strengthen during the ongoing festive season. “The interest in Zest is picking up and we expect sales to pick up and reach 4,000-5,000 a month after Diwali,” said a dealer who owns Tata Motors showrooms in major Indian cities.
While Tata Motors will formally reveal the booking numbers for Zest in October, the company had tweeted in September that it had received over 10,000 orders from dealers across India for August and September.
Yashesh Mukhi, an auto sector analyst with Morgan Stanley, says the petrol variant of Zest has a waiting period of two to four months for delivery.
In the past too, new launches have worked in Tata Motors’ favour, at least in the early days. Within the first month of its launch in July 2009, Tata Motors’ hugely anticipated compact car Nano made a mark by contributing around 14.4% of the company’s monthly passenger vehicle sales. Tata Motors’ July 2009 sales went up 32% year-on-year to 17,191 vehicles. However, the success of Nano proved to be short-lived with customer interest failing to sustain after a while.
Analysts state that despite the slowdown in the economy that has adversely impacted demand for cars, new launches have helped certain carmakers do well. “New car models help customers come back to showrooms amid a slowdown,” says Puneet Gupta, associate director at IHS Automotive. “Usually, new models reach their peak volume in 6-12 months. If Tata Motors can sell 10,000 units of Zest in two months, it could be a decent start, but they can certainly deliver more.”
Besides Tata Motors, several other carmakers including Honda, Ford, Renault and Maruti Suzuki have seen new launches help overall sales.
For instance, Honda launched an entry-level sedan, Amaze, in April 2013 followed by the new City in January 2014. The Japanese carmaker also introduced a diesel engine that helped it attract more buyers. A month after the company introduced Amaze, Honda recorded its highest ever domestic monthly sales of 11,342 units in May 2013. The carmaker broke its own record a year later by registering its highest ever monthly domestic sales of 18,426 cars in March 2014, two months after launching the new City.
Rachit Vats | The Financial Express