Tata Motors Passenger Vehicles MD & CEO Sees Potential Impact on Auto Demand from Fuel Price Hikes

Tata Motors Passenger Vehicles MD & CEO Shailesh Chandra Discusses Impact of Fuel Price Hike on Industry Demand

The impact of rising fuel prices on the automobile demand in India remains a pressing concern for the auto industry. Tata Motors Passenger Vehicles MD & CEO Shailesh Chandra emphasized that it is premature to change the FY27 outlook of 10 per cent growth in passenger vehicles sales.

During a media roundtable held on the sidelines of the launch of the Next Gen Tiago, Chandra noted that fuel prices have increased four times in the last 10 days, making it challenging to assess the eventual impact on consumer sentiment and demand. He cautioned that higher diesel prices could have a multiplier effect on inflation, which may influence consumer sentiment and spending patterns.

Chandra pointed to a slowdown in the used car market as a sign of weakening consumer sentiment, noting that people may begin cutting back on spending to save cash amid inflation concerns. This mindset could deepen if price pressures rise further. Despite concerns over rising fuel prices and inflationary pressures, Chandra expressed optimism about the company's growth prospects, citing a strong product pipeline.

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The company launched the Next Gen Tiago, available in petrol, iCNG, and electric powertrains, strengthening its position in the affordable hatchback segment. The new petrol variant starts at Rs 4.69 lakh (ex-showroom), Rs 5.79 lakh (ex-showroom) for CNG, and EV starts from Rs 6.99 lakh.

Regarding the demand for electric vehicles (EVs), Chandra observed that bookings have risen sharply in recent months. EV demand had already begun gaining traction even before the recent fuel price hikes, possibly in anticipation of higher running costs. According to Chandra, EV demand has a "very compelling proposition" and should continue to grow in multiples.

In terms of increasing capacity for EVs, Chandra noted that the in-house capacity is fungible between power trains for the same model. However, on the supplier side, the company would need to work with suppliers on agreed supply schedules ranging from three months to a year, depending on requirements. Chandra estimated that the company should be able to enhance capacity by at least 50 per cent more than what it is today in the next three to four months.

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When asked about the current scenario, whether he sees hatchback EVs or ICE (internal combustion engine) getting rekindled, Chandra replied that it's "very difficult to predict right now." However, he noted that the share of hatchback vehicles in the total industry volume in the country has stabilized at about 21-22 per cent over the last two years.