Tata Motors to build 5 lakh cars, SUVs every year

Tata Motors has beaten all odds by posting record car sales despite the ravages of the pandemic and the semiconductor shortages that have caused worldwide disruptions to production.

• Tata Motors has asked suppliers to prepare for 15,000 Nexons per month
• The manufacturer is targeting sales of 50,000 units per month next fiscal
• Tata’s sales overtook Hyundai’s in December 2021

“The last two years have been difficult for the auto industry and seeing Tata Motors grow two-and-a-half times is something that makes me proud,” said Shailesh Chandra, managing director, Tata Motors Passenger Vehicles and Tata Passenger Electric Mobility.

He made these comments whilst accepting the Manufacturer of the Year award on behalf of the company at the recent Autocar Awards 2022 ceremony. Ever since the pandemic engulfed the world in early 2020, Tata Motors has bucked the trend and outpaced the industry – with sales zooming from 1,31,197 units in FY20 to a projected 3,50,000 units in FY22, based on the current sales momentum.

The future looks bright

And now, with the dark clouds of the pandemic fast abating and the supply crunch of semiconductors easing, the company is gearing up for even more growth in a bullish market forecast to have clear skies ahead. According to industry sources, encouraged by strong demand across its product lines, Tata Motors has drawn up aggressive plans to produce over 5,00,000 cars a year. It is targeting sales of around 40,000 cars per month in the first few months of the next fiscal, rising to 50,000 units a month on the back of new launches, additional variants and facelifts later in the year.

Tata Motors is believed to be focusing on the Nexon, Altroz and Punch as the main volume drivers, since these are the most profitable models in its portfolio. Suppliers have been told to gear up for volumes of 15,000 Nexons per month, of which over 3,000 are likely to be the all-electric variant. The long-range Nexon EV, due in the first quarter of the next fiscal, is expected to further boost demand for Tata Motors’ (and India’s) bestselling EV.

The company also has an ambitious target to sell over 10,000 units each of the Altroz and Punch per month. The Altroz has finally got an automatic option, which should enhance demand, whilst the Punch is making strong inroads into the lower end of the compact SUV segment, where there isn’t too much competition. Whatever balance capacity remains will be used for the Harrier/Safari and Tigor/Tiago models. 

Interestingly, Tata Motors has no all-new models planned next fiscal except for the Nexon Coupe, which, in essence, is a derivative of the current Nexon. The company appears to have prioritised investing in capacity over product development, and, as such, is close to acquiring Ford’s Sanand plant.

Sanand beckons

The Sanand plant will augment Tata Motors’ capacity by an additional 2,40,000 units to 7,20,000 units per annum. At present, the company has a capacity of 4,80,000 units across multiple plants. The Nexon is produced at the Ranjangaon plant near Pune, which is part of a manufacturing joint venture with Stellantis. The Pimpri plant at Pune is home to the Harrier, Safari, Altroz and Punch, while Tata’s own facility at Sanand (which was originally planned for the Nano), rolls out the Tiago and Tigor compact cars.

Once the Ford deal is sealed, the American automaker’s Sanand unit will, in all likelihood, be earmarked for new models across electric, CNG and the internal combustion engines. Tata is unlikely to produce its own engines at Ford’s Sanand plant, as the latter has already indicated that it will retain the engine manufacturing business for exports.

It now remains to be seen how quickly the transfer of ownership happens, even as sources reiterate that the Gujarat government will ensure a speedy transition, especially with the assembly elections scheduled to be held this year.

Incidentally, it was Gujarat which had literally laid out a red carpet for Tata Motors in 2008, when the company decided to slam the brakes on the Nano project in West Bengal. The government wasted little time in offering Sanand as an alternative location and this became home to the people’s car.

Since then, Gujarat has attracted more brands, and just last week, Maruti-Suzuki announced an investment of Rs 10,440 crore in EV and battery manufacturing.

As for Ford, it still has its other facility at Maraimalai Nagar near Chennai, where the Tamil Nadu government is anxious to find a buyer. In fact, recent meetings between Tata Group chairman N Chandrasekaran and Chief Minister MK Stalin sparked speculation that the company was considering this plant, but it was never an option for Tata Motors.

“The Maraimalai Nagar plant does not have the desired flexibility in manufacturing and can only make two models, which ruled it out,” said a Ford source. “The Sanand facility in comparison is a state-of-the-art manufacturing facility which Tata Motors could get for a bargain.”

Slow and steady…

However, the Sanand plant too poses its own set of challenges, which is why Tata Motors has not been in a rush to snap it up. Built to Ford’s global standards, it has a body shop with over 90 percent robotisation. Whilst this level bodes well for quality and productivity, sources say that it requires “a minimum volume of 1,00,000 units a year for operational breakeven”.

But given the strong pull on current products and a slew of EVs planned in the coming years, Tata Motors is confident about mopping up the big jump in capacity the Sanand plant brings. There’s no doubt that Tata Motors is on a roll. It overtook Hyundai as the number two player in December 2021, and given the company’s sales trajectory, this decade could see the stakes shift in favour of Tata Motors as a serious rival to market leader Maruti Suzuki.